Oil soars on Alaska shutdown, Mideast

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

London Brent crude <CLOc1> climbed as much as two percent to $77.73 a barrel, within reach of its all-time high of $78.18, on expectations that the United States would scour European markets for replacement oil. At 0906 it was up $1.17 at $77.34.

U.S. crude <CLc1> was up $1.59 at $76.35, off a $76.55 high. It hit a record $78.40 in July.

"The BP field is a sizeable stream. The world is already concerned about supplies and this is just adding to concerns," said Tony Nunan, a risk manager at Mitsubishi Corp. in Tokyo.

BP Plc (BP.L: Quote, Profile, Research) said on Sunday it was shutting down indefinitely the Prudhoe Bay oil field in Alaska, cutting production by 400,000 barrels per day (bpd). The closure was due to the discovery of severe corrosion and a tiny spill from a Prudhoe Bay oil transit line, BP said.

"This latest setback to global oil production comes in the context of a relatively tight oil market," analysts at BNP Paribas said in a research note.

"In this environment we maintain our forecast for Brent crude of $77 a barrel this quarter, and so implicitly expect prices to move above $80 a barrel at some point this quarter."

Analyst Jim Ritterbusch of Ritterbusch and Associates in Galena Illinois said the United States could cover the lost output with imported oil. The United States is the world's biggest oil consumer by far, using 25 percent of its crude.

MIDDLE EAST BOILS

Tensions in the Middle East rose after Iran again invoked its oil exports for political leverage and Lebanon rejected a draft U.N. resolution meant to end the war between Israel and Hizbollah, delaying its vote.

• 1
• 2