World oil price near record highs - Emirates24|7

World oil price near record highs


World oil traded only a little below $122 per barrel Wednesday after concerns over supply in key producer Nigeria helped push prices to record highs in frenzied trading, dealers said.

New York's main oil futures contract, light sweet crude for June delivery, was 21 cents lower at $121.63 in afternoon Asian trade.

The contract closed on the New York Mercantile Exchange Tuesday at a record high of $121.84 after leaping to $122.73, an all-time intra-day high.

Brent North Sea crude for June fell 15 cents to $120.16 per barrel. The contract had earlier reached a new peak of $120.99 before settling at a record closing high of $120.31 on Tuesday in London.

Runaway oil prices have almost doubled in the past year and have surged by more than $20 since the start of 2008.

David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney, said sentiment remained buoyant after Tuesday's sharp gains.

"While issues on the supply side are being progressively resolved... they highlight the risks of oil production going forward," said Moore.

The supply disruptions in Nigeria have been important but there have been indications they will be resolved, he said.

Nigerian militants attacked an oil ship off the coast of the west African country and took two people hostage over the weekend, a military spokesman said Sunday.

The incident on Saturday came after an attack on Shell oil wells and a flow station in southern Bayelsa state, leading to a cut in the company's output. Nigeria is Africa's largest oil producer.

Barclays Capital analyst Kevin Norrish said "supply losses" are the key driver at present.

"Iran may also add a little risk element" in the near term, Moore said.

Iran said Monday it would reject any offer that violates its right to the full nuclear fuel cycle after world powers said they had prepared a new package to end a long-running standoff over its nuclear programme.

Oil players fear the ongoing tension could result in Iran using oil as a bargaining chip. Iran is the second-largest producer in the Organisation of the Petroleum Exporting Countries (Opec) cartel.

An analyst at BMO Capital Markets earlier cited "rumors of US action against Iran circulating in the markets" that affected oil and the dollar.

Analysts also said prices have been boosted by latest data showing the United States economy might be in better health than expected.

Traders had feared that a severe slowdown in the United States, the world's biggest economy and largest energy consumer, could affect oil demand.

Record-breaking oil prices have sparked widespread international concern among consumer nations amid predictions that they could rise perhaps as high as $200 per barrel.

Kuwaiti Oil Minister Mohammad Al Olaim last week said Opec may hold an extraordinary meeting on oil prices before a scheduled conference in September, and did not appear to rule out higher production.

But Libya's acting oil minister Chukri Ghanem recently indicated that Opec could not pump more crude.