Oil surged to a record high near $76 a barrel on Thursday on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Hizbollah in Lebanon heightened international tensions.
LONDON: Oil surged to a record high near $76 a barrel on Thursday on renewed worries over supply from major exporter Nigeria and as conflict between Israel and Hizbollah in Lebanon heightened international tensions.
Prices also rose as the Iran nuclear row appeared to be heading to the UN Security Council, North Korea walked out of talks with South Korea and crude inventories in top consumer the United States fell more than expected.
"Geopolitical risk is out of control," said Tony Nunan, a risk manager at Mitsubishi Corp. "There's... Nigeria, Israel is taking a strong stance and that's adding fuel to the fire, but more than anything it's US gasoline demand holding up and the Iran situation."
US crude traded 80 cents higher at $75.75 a barrel by 1036 GMT, after hitting a record $75.89. London Brent was up $1.08 at $75.47 after reaching a record $75.60.
In Nigeria, two suspected explosions at a crude oil pipeline operated by Agip, a unit of Italy's Eni, caused oil spills, Nigerian officials said. Eni denied reports of sabotage and extensive oil spills and said the damage would be repaired soon.
Royal Dutch Shell Plc has already had to shut down 473,000 barrels per day of Nigerian supply, almost a quarter of output in Africa's top oil supplier, due to attacks by rebels.
Adding to Middle East tensions, Israel struck Beirut airport and blockaded Lebanese ports on Thursday, intensifying reprisals that have killed 47 civilians since Lebanese Hizbollah fighters seized two Israeli soldiers and killed eight a day earlier.
Supply breaks and growing Middle East tension mean oil prices may rise further, analysts say. The Middle East pumps about a quarter of world output, but neither Israel nor Lebanon are producers.
"It's a strong combination of positive fundamentals and heightened geopolitical tensions pushing oil to new highs," said Kevin Norrish of Barclays Capital.
"It's difficult to see why the upward momentum shouldn't continue."
Qatari Oil Minister Abdullah al-Attiyah said there was no shortage of crude oil in world markets, blaming geopolitical tensions for the surge to record-high prices.
"The main thing is that we see that there is no shortage in the market at all," he told reporters. "Speculators are using the geopolitical situation to their benefit and we are seeing how the oil prices are reacting."
Qatar is the smallest producer in OPEC. The 11-member group has been powerless to stem oil's rally as rising world demand has used up much of the group's reserve production capacity.
Oil in New York is up 24 percent in 2006 because of supply cuts in Nigeria, the Iranian nuclear row and a flow of investment money into commodities. North Korea's missile tests have added to global tensions.
Iranian President Mahmoud Ahmadinejad said on Thursday the world's fourth-largest oil exporter would not abandon its right to nuclear technology after Tehran's case was referred back to the UN Security Council.
And in Asia, North Korea blamed the South for the collapse of their first high-level talks since Pyongyang's missile tests sparked a regional crisis, saying Seoul would "pay a price" for the failure.
Oil prices are also drawing strength from rising demand in the United States in the face of high prices and robust world economic growth.
US crude inventories slid 6 million barrels last week as imports fell, a government report said on Wednesday. The drop was five times larger than the 1.2 million barrels forecast among analysts polled by Reuters.
US motorists, who use over 40 percent of the world's gasoline, bought 1.7 percent more fuel in the past four weeks compared with a year ago. The data covered the Independence Day holiday weekend when annual gasoline demand peaks.
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