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Oil supply worries persist on global tensions

Filed on January 22, 2006

WORLD oil prices surged this week beyond four-month high points as the market was shaken by Al Qaeda’s apparent threat to the United States, and supply worries persisted over Nigeria and Iran.

New York’s main contract, light sweet crude for delivery in February, on Friday hit $68 per barrel. In London the same day, Brent North Sea crude jumped past $66 for the first time since September 6.

Global demand for crude, meanwhile, was forecast to rise by 1.9 per cent in 2006 to 84.8 million barrels per day (bpd), the Organisation of Petroleum Exporting Countries said in a report on Friday.

The US has rejected a truce offer from Al Qaeda chief Osama bin Laden, made in an audiotape broadcast over Al Jazeera television, despite a threat of more attacks on its soil.

Elsewhere, Nigerian oil workers’ unions threatened on Friday to withdraw their members from the troubled Niger delta region if the government fails to stop continuing violence there. Armed rebels have threatened further attacks.

And Iran, the second-biggest crude producer in Opec, has asked the group to reduce its oil production quota by one million barrels per day from April, Teheran’s representative said ahead of a January 31 output meeting.

The comments came amid a simmering crisis over Iran, with Teheran warning the West that UN sanctions over its controversial nuclear programmeme could provoke a world oil crisis and even higher prices. “There is nothing in the market that says prices should come off at the moment,” said Man Financial trader Lee Elliott. There was a “strong possibility” of new records as early as the end of next week, he added.

In London, a barrel of Brent North Sea crude for delivery in March raced to $66.12 late Friday, from $62.60 the previous week. In New York, a barrel of crude for delivery in February rocketed to $67.65 from $63.45.

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