Oil prices rise amid new Mideast tensions
Oil prices rocketed 2% today as concerns about further tensions in the Middle East and their impact on supplies emerged from the wreckage of the bomb blasts in Saudi Arabia.
The London benchmark price of Brent crude oil rose 50 cents to 25.39 US dollars a barrel as the terrorist attacks in which killed 10 Americans overnight dampened market confidence.
Saudi Arabia is the world’s biggest oil producer and analysts have warned that any attack on the sector would have serious consequences for prices.
Tension has surrounded Middle East oil supplies in recent months with the US-led Iraq war responsible for most of the worries.
Oil prices were extremely volatile in the run-up to the start of hostilities.
Before the war, oil prices reached 40 dollars a barrel but have fallen back in the world market place since the conflict ended earlier this month.
The latest attacks come at a crucial time when confidence was returning to the sector.
Fears that the war would spark turmoil in the Middle East, which supplies two-fifths of globally-traded crude, have appeared to be exaggerated but could yet resurface.
Higher crude oil prices have a knock-on effect on the wider economy, pushing up prices for petrol, heating oil and other fuels which in turn raise the cost of energy and transport for households, industry and motorists.
Iraq was pumping close to 2.5 million barrels of oil a day before the war. It is gradually edging towards one million a day now, well short of earlier predictions, having seen production slow to a trickle in recent weeks.
As the world’s seventh-largest oil supplier, the interruption to Iraqi supply could itself be responsible for some of the latest price rises.
