LONDON, Aug 8: World oil prices struck fresh record high points on Monday, reaching almost $64 in New York, as an unspecified threat caused the United States to shut its embassy in Saudi Arabia — the world’s biggest exporter of crude. New York’s main contract, light sweet crude for delivery in September, soared $1.68 to $63.99 per barrel in early deals.
Before Monday, the previous high stood at $62.50 — a level reached last Wednesday after US refineries were hit by disruptions. In London, the price of Brent North Sea crude oil for delivery in September surged $1.63 to $62.70 per barrel on Monday.
The previous high stood at $61.26, reached also last Wednesday. The gains in oil are “tied to a ‘heightened state of alert,’ as opposed to an actual supply shortage,” said Tim Evans, a senior analyst at IFR Markets.
“This gives the markets an opportunity to blast to new highs in the near term, although the ongoing flow of ample production means that a major downside risk for this market remains.” The US embassy in the Gulf kingdom had said on Sunday that its premises in Riyadh as well as two consulates would shut until Wednesday in response to an unspecified threat.
“In response to a threat against US government buildings in the kingdom the US embassy in Riyadh and the US consulates general in Jeddah and Dhahran will be closed on August 8 and 9,” it said, without providing further details. “There’s uncertainty in the market,” a trader at Bache Financial said.
“People are worrying about terrorist action or disruption of oil supplies in Saudi Arabia.”
Oil prices are 40 per cent higher than a year ago. However adjusted for inflation, they remain far below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of $80 a barrel in today’s money.
Prices had reached historic peaks last week owing to disruptions at US refineries, which are battling to provide sufficient gasoline and heating fuel to meet robust demand, particularly from the northern hemisphere. The United States is the world’s biggest consumer of energy.
“Some refineries are down for maintenance but there a lot of general problems,” Investec analyst Bruce Evers said Monday.
The failure by oil giant ExxonMobil to restart its 245,000 barrels-per-day refinery in Joliet, Illinois, as scheduled last Thursday, was particularly compounding worries of a supply disruption, dealers said.—AFP
