The price of a barrel of oil was at over 146 dollars (3,431 roubles. 93.92 euros. 73.58 UK pounds) for the first time in New York and London trading on Thursday. Analysts say that concerns over supply in Iran, the world’s fourth-biggest crude producer, was a major factor bringing up prices. Speculation mounted that Israel and the US might be planning a military strike on suspected nuclear weapons sites in Iran. Iran warned that any attack would be met with an effort to choke off oil shipments through the Straits of Hormuz, which daily carries 80 percent of the oil from the fields of the Persian Gulf.
A statement made by Saudi Arabian Oil Minister Ali al-Nuaimi at the World Petroleum Congress this week is seen as another reason. He mentioned that, at present, there are no shortages on the market. This may hint that Saudi Arabia, a leading world oil exporter, is not willing to fulfil its pledge to boost crude output. The struggling US economy is also to be regarded as a factor. According to a report from its Energy Department, American oil deposits have lost several million barrels over the past week.
All these factors will still be relevant in the foreseeable future, so oil prices are expected to climb further. In the opinion of a Russian expert, Dr Igor Davidenko, “There is nothing more natural than growing oil prices. The price of 150 dollars (3,525 roubles. 95.48 euros. 75.60 UK pounds) per barrel is yet quite reasonable. When it goes above 200 dollars (4,700 roubles. 127.30 euros. 100.80 UK pounds) per barrel, it will trigger the need to step up searching for alternative sources of energy. I expect a lot of discoveries in this field. At present, only some researchers and venture companies are preoccupied with the issue. Bio-fuels cannot ease the looming energy crisis because there is not enough water supplies and space for cropland to convert crop plants into distilled spirits”.
Some analysts forecast that a barrel of oil in New York trading may breach the psychologically important mark of 150 dollars (3,525 roubles. 95.48 euros. 75.60 UK pounds) by next week. The tendency is hard to stop, as the market is functioning like a nasty mob driven by emotions rather than objective reality.
4 July 2008
Vyacheslav Solovyov
Voice of Russia World Service
http://www.ruvr.ru/main.php?lng=eng&q=29270&cid=57&p=04.07.2008
