Oil prices hit 2 month high on Mideast tensions

July 23, 2012
World oil prices hit 2 month highs as traders fretted over the impact of simmering geopolitical tensions in the crude rich Middle East.

In New York, light sweet crude for delivery in August soared $2.79 to $92.66 per barrel the highest close since May 17. In London Brent North Sea oil for delivery in September jumped $2.64 to $107.80 per barrel the highest close since May 22.

Carsten Fritsch, analyst of Commerzbank, said that «Prices have climbed. The conflict in Syria which has already been under way for 16 months appears to be escalating. The Iran conflict is also coming into increasingly sharp focus, Israel having blamed Iran for the attack on Israeli tourists in Bulgaria».

Tensions in Syria rose as fighting in the capital Damascus entered its fifth day, Syrians fled across the border into Lebanon in their tens of thousands and the Syrian opposition was said to be in control of all the border crossings between Iraq and Syria.

World powers remained in deep disagreement on how to end the fighting with Russia and China vetoing a Western backed UN Security Council resolution that paved the way for sanctions and moved a step closer toward military intervention.

Susan Rice, US Ambassador to the United Nations, said that the UN Security Council had failed on Syria. «We will intensify our work with a diverse range of partners outside the Security Council to bring pressure to bear on the Assad regime and to deliver assistance to those in need».

Mr Tamas Varga analyst of PVM Oil Associates said that «Syrian oil production capacity is only around 400,000 barrels per day but when a suicide bomber kills a minister who was a close ally of the ruler of the country, it is inevitable that oil prices go up».

Meanwhile, Israel accused Iran and Lebanese group Hezbollah of carrying out a deadly attack against Israelis in Bulgaria setting the stage for new tensions in the Middle East.

Mr Benjamin Netanyahu PM of Israel said that «all the signs point to Iran linking Wednesday's blast to a string of attempts to attack Israelis around the world. Israel will respond forcefully to Iranian terror. Iran responded by saying it strongly condemns all terrorist acts».

Market sentiment was also boosted after figures showed American crude stocks sank 800,000 barrels in the week ending July 13th 2012 for a fourth weekly decline in a row. Prices had risen at the start of the week on tensions over major crude producer Iran which said that US military deployment in the Gulf was a source of insecurity».

Copyright 2012, AFP. All rights reserved.