Oil price tips over $137 a barrel

06/06/2008| IslamWeb

The oil price reached a new record above $137 a barrel after a report suggested it could reach $150 by July amid rising geopolitical tensions.

Crude oil in New York added a record gain of $9 to hit $137.07 a barrel.

 

The rise came as US shares fell sharply in response to unemployment figures reaching 5.9%, a four-year high.

 

Increased demand by China and India is also pushing up oil prices along with the weaker dollar, which has made commodities an attractive investment.

 

Crude oil hit a record high of $135 a barrel last month.

 

The BBC's North America Editor, Justin Webb, says the gloomy figures are a reminder to all Americans that the nation faces serious economic problems and perhaps even a recession.

 

Worries

 

Oil prices were given a boost on a report by Morgan Stanley analyst Ole Slorer, who suggested the price of oil could rocket to $150 as early as July.

 

Some analysts have suggested that prices would reach as high as $200 a barrel during the next 18 months.

 

The price of the benchmark light, sweet crude oil has already seen rapid gains over the past months and has gained more than 40% over the year.

 

It is more than twice the price it was a year ago.

 

The market was also responding to a statement by Israel's transport minister that an attack on Iran was "unavoidable" after sanctions to prevent Tehran from developing its nuclear capability had failed.

 

Investors hedging oil against the weak dollar has also pushed up the price of oil.

 

Fears that workers at Chevron Corporation in Nigeria may go on strike and subsequently disrupt production and access to oil are also adding to market jitters.

 

Sustained demand?

 

Oil prices had recorded losses earlier this weak after doubts about future demand took hold of the market.

 

Both the Indian and Malaysian governments have raised fuel prices in order to cut the subsidies they provide.

 

The International Energy Agency (IEA), an adviser to 27 industrialised countries, had said it could lower its 2008 demand growth projection further, after having already more than halved it to 1.03 million barrels per day.

 

But several analysts have proven bullish about future prospects.

 

Harry Tchilinguirian, oil analyst at BNP Paribas in London, said demand would be sustained by expanding Asian nations.

 

"World oil demand growth is still accounted mostly by China, the Middle East and Latin America - and through the summer, there is no reason to expect a material slowdown in demand growth in these areas," he said.     

 

 

 

PHOTO CAPTION:

Oil barrel

 

 

BBC