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Oil hits new high over $48

US light crude CLc1 on the New York Mercantile Exchange rose 93 cents to $48.20 a barrel, a new record, and London Brent LCOc1 gained 67 cents to $43.70 a barrel. US prices have set record peaks in all but one of the past 15 trading sessions and are up nearly $11 a barrel, 29 per cent, since the end of June. Rising world oil demand has left little slack in the system to cope with outages in Iraq where Shia militia have said they will target oil infrastructure if US forces do not leave the holy city of Najaf.

Fierce fighting raged in Najaf yesterday after rebel Shia cleric Moqtada Al Sadr defied an Iraqi government threat to attack his stronghold in a holy shrine and rejected demands that he end his uprising.

Iraq’s main southern pipeline from the Basra oilfields has been shut since a sabotage attack on Aug. 9, curbing export flows to about a million barrels daily, half normal rates, through a secondary line. Iraq’s oil minister said that exports would not be restored until the security situation improved. “Once things return to normal (exports) will be back to normal,” Thamir al-Ghadhban told Reuters.

Demand growth in emerging economies China and India has shaken up the oil market this year, intensifying competition for supply with established consuming giants such as the United States.

“The market is currently slightly higher than it should be, but I do expect to see $50 a barrel on Nymex crude oil by the fourth quarter,” said Benoit de Vitry, global head of commodities for Barclays Capital.

China’s refineries have processed 17.2 per cent more crude so far this year than in 2003, the country’s State Statistical Bureau said on Thursday. Crude imports to end-July have soared nearly 40 per cent from last year. India’s biggest refiner, state-run Indian Oil Corp. Ltd. (IOC), said it expected India’s crude oil imports to rise by 11 per cent in 2004/05 as demand rises by nearly four per cent. ”Refineries are running flat out,” said IOC chairman M S Ramachandran. In the US, which guzzles around a quarter of the world’s oil, demand so far this year is up 3.4 per cent, stopping inventories building much as rising consumption absorbs extra imports from Opec producers such Saudi Arabia.

US government data for the week on Wednesday showed commercial crude oil supplies had fallen 1.3 million barrels to 293 million barrels last week, the third straight week of declines. Nerves were little calmed by Opec assurances on Wednesday that it had raised output in July to a level that should permit a substantial build-up in world oil stocks in the fourth quarter. Opec is pumping at its highest level since 1979 and a report from Opec headquarters estimated it could raise production to 30.5 million bpd next month.