LONDON, Oct 20: Scorching oil prices blazed a record-breaking trail beyond $90 this week as traders fretted over the weak US dollar and geopolitical jitters in the crude-rich Middle East.
Prices were electrified by fears that a Turkish military incursion into northern Iraq could further tighten world energy supplies, analysts said.
Elsewhere, the platinum hit another all-time pinnacle owing to tight supplies, while gold traded at the highest point since 1980.
OIL: World oil prices gushed to record peaks on simmering tensions along the Turkey-Iraq border -- prompting analysts to warn of crude striking $100 per barrel some time soon.New York’s light sweet crude spiked as high as $90.07 per barrel on Friday and London’s Brent oil leapt to an historic $84.88 on Thursday.
Opec chief Abdalla Salem El-Badri expressed “concern” at the recent price spike but argued that current levels did not reflect the true state of supply and demand.
The issue seems no longer to be whether oil will reach $100 per barrel, but when, said Barclays Capital analyst Kevin Norrish.
Once the furore has settled down, the oil market as a whole can get on the job of working out whether supply and demand dynamics mean that long-term prices should have two or three digits.Iraq’s Kurds vowed Friday to fight off any attack on the northern region as pressure mounted in Baghdad and Washington for action against Kurdish rebels to stave off a potential Turkish incursion.
Traders are concerned because many of the troubled country’s largest oil fields are based in the north.
Turkey has said it will pursue diplomacy to defuse the crisis over Kurdish rebels in northern Iraq while Baghdad has tried to dissuade its northern neighbour from possible military action.
The Turkish parliament Wednesday approved a motion authorising military strikes against the Kurdistan Workers’ Party (PKK), which is accused of using bases in northern Iraq for attacks on targets across the border in Turkey.
The market was also fretting over the falling US dollar. A weak greenback makes commodities priced in the US unit cheaper for buyers using stronger currencies and therefore boosts crude demand, analysts say.
The European single currency hit a fresh record high at $1.4319 earlier Friday.
Prices were still underpinned by a weakening dollar and tight fuel supplies ahead of the winter heating season, said Sucden analyst Andrey Kryuchenkov.
Demand for heating fuel hits a peak during the forthcoming northern hemisphere winter.
Oil also spiked after US President George W. Bush reignited market concerns over the Iranian nuclear crisis.
Highlighting the uncertainties in the Middle East, Bush said he had warned world leaders they must prevent crude producer Iran from getting nuclear weapons if you’re interested in avoiding World War III. Petromatrix analyst Olivier Jakob said the comments added a fear factor premium to the prices. The psychological warfare between the US and Iran
translate to an additional risk premium into oil futures,” he said.
By Friday, Brent North Sea crude for December delivery leapt to $83.87 a barrel, which compared with $80.85 for the November contract a week earlier.
New York’s main oil futures contract, light sweet crude for delivery in November, rocketed to $88.59 a barrel, from $83.99 a week earlier.
PRECIOUS METALS: The price of white metal platinum roared to another record peak thanks to supply problems in major producer South Africa, while gold enjoyed another 27-year peak, traders said.
Platinum, used by the jewellery industry and in the manufacture of catalytic exhausts for cars, hit a record high $1,460 an ounce in London.
The precious metal, which benefits from tight global supplies and fierce demand, has won 35 per cent in value over the past year.
The price of gold leapt to the highest level since the start of 1980, winning support from runaway crude oil prices and the weak US dollar.
Gold prices surged as high as $771.10 per ounce, which was last seen in January 1980. In the past year, gold has soared by almost 30 per cent in value.
Prices jumped higher “on a combination of a weaker dollar, geopolitical concerns, positive investor sentiment and record high oil prices, said analysts at Barclays Capital.
They added: “Geopolitical concerns have come on the back of Turkey debating potential military action in Northern Iraq to combat Kurdish rebels while ... crude oil prices have hit fresh all-time highs.Gold prices are boosted by record high oil prices, which in turn spark inflationary concerns. The precious metal is seen as a safe haven in times of both rising inflation and geopolitical uncertainty.
On the London Bullion Market, gold jumped to $763 an ounce at Friday’s late fixing, from $749.50 a week earlier.
Silver climbed to $.83 an ounce at Friday’s late fixing, from $13.79 a week earlier. —AFP