October 18, 2007	Thursday	Shawwal 5, 1428

LONDON, Oct 17: Oil prices jumped on Wednesday to a record high $89 on simmering tensions in the crude-rich Middle East that could further stretch tight global energy supplies, traders said.

New York’s main futures contract, light sweet crude for delivery in November, hit an historic $89.00 per barrel exactly in late afternoon deals on Wednesday.

Brent North Sea crude for December delivery rose as high as $84.43 per barrel. The November contract had expired on Tuesday after hitting an all-time high of $84.49.

The Turkish parliament voted on Wednesday to allow its government to send troops into northern Iraq to crack down on Kurdish rebels. Many of Iraq’s largest oil fields are located in the north of the troubled country.

At the same time, US President said he has warned world leaders they must prevent crude producer Iran from getting nuclear weapons “if you’re interested in avoiding World War III.”

Prices have gained more than $4 since Monday and now threaten to break the psychologically-important 90-dollar barrier.

“You’ve got the backdrop of a very tight supply-demand balance, but obviously the potential of any conflict in the Middle East just simply raises those risks quite substantially, given the fact that Opec ... doesn’t think there is any need to raise production,” said analyst Simon Wardell at Global Insight.

Opec chief Abdalla Salem El-Badri had on Tuesday expressed “concern” at the price spike but argued that current levels did not reflect the true state of supply and demand.

“Geopolitical concerns have resurfaced with the possibility of an incursion of Turkish forces into Iraq,” added Standard Chartered analyst Helen Henton.

“While the direct impact of any conflict in Northern Iraq on oil exports is potentially quite limited, the markets are pricing in a wider scale disruption to the region, including some key pipeline routes through Turkey.”

Iraq’s volatile crude output averaged 1.9 million barrels per day (mbd) over the last year, according to Henton.

Traders also looked to George W. Bush, whose comments have reignited market fears about the Iranian nuclear crisis.

The US Department of Energy said on Wednesday that American crude reserves jumped 1.8m barrels in the week ending October 12, beating analysts’ consensus forecasts of 1.05 million. —AFP