Oil rises to 2007 highs at $66.70 in Asian trade
Afp, Singapore
Oil prices rose to fresh 2007 highs in Asian trade Friday as tensions over Iran's detention of British military personnel increased further, dealers said. At 2:40 pm (0640 GMT) New York's main oil futures contract, light sweet crude for delivery in May, was up 67 cents to 66.70 dollars a barrel from 66.03 dollars in late US trades Thursday, the highest price since early September. Brent North Sea crude for May was up 70 cents at 68.58 dollars. Geopolitical risk in Iran, the world's fourth biggest oil producer, remains the key factor applying upward pressure on crude futures, analysts said. "Iran is more aggressive in handling the issue of the detained sailors. They won't beg. They're making a pretty tough stance, driving up the possibility of military conflict in the Gulf," said CFC Seymour senior investment strategist Dariusz Kowalczyk in Hong Kong. He said the market was pricing in the possibility of further risks over the weekend. "The market will continue to reassess the risk to supply ... the potential for conflict and the disruption of oil supply is real because Iran is directly involved and oil could hit record highs if anything happens," he said. "The market is just very nervous so any sort of headline or rumour that suggests that the situation between the West and Iran -- between Britain and Iran -- might be getting worse is going to have a bullish impact on prices," Bache Financial trader Tony Machacek said in London hours. Oil prices are being supported also by Iran's refusal to bow to international pressure over its disputed nuclear programme. Simon Hayley, senior international economist at Capital Economics, said the premium was currently at about 5.0 dollars a barrel. With the premium stripped out, and if the market reacted solely to oil's demand-supply balance, prices would likely be trading at between 60 and 62 dollars. Despite this week's spike in crude, prices remain a long way off record highs of above 78 dollars last year. The 15 Royal Navy sailors and marines were detained in the Gulf last Friday, leading Britain to freeze ties with the Islamic republic. Prices rose even higher on Thursday after Iran decided against releasing the only female sailor held among the group.
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