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SINGAPORE: Oil prices surged past US$145 per barrel for the first time Thursday as the weak US dollar and Middle East tension stoked black gold's record-breaking run, analysts said.
Brent North Sea crude for August delivery hit US$145.11 in early Asian trade, before easing back to US$144.90. It had settled at a record US$144.26 in London on Wednesday after breaking US$144 for the first time.
New York's benchmark contract, light sweet crude for August delivery, hit an intra-day record price of US$144.44. By late morning the contract was 70 cents higher at US$144.27 against a record close of US$143.57 in the US on Wednesday.
The latest surge followed a warning from Iranian Oil Minister Gholam Hossein Nozari that his country, a key crude producer, would react fiercely to any attack against it.
"Iran, if there were any kind of activity of any sort, is not going to be quiet and would react fiercely," he told reporters on the sidelines of the World Petroleum Congress in Madrid.
He said oil prices, which have been driven to record levels partly because of fears about the loss of Iran's oil output, would rise radically if Israel or the United States launched a military strike.
"That's the kind of talk that kind of juices the market," said Jason Feer, vice president and general manager, Asia Pacific, for energy market analysts Argus Media Ltd. in Singapore.
Western powers and Iran have been engaged in long-running efforts to resolve a stalemate over Iran's nuclear enrichment programme, which the West fears could be used to make an atomic bomb.
Iran, the world's fourth largest oil producer, says its nuclear programme is for peaceful purposes.
The Iranian tensions, along with unrest which has cut output in key African producer Nigeria, and the weaker US currency were among factors combining to push prices higher, Feer said.
"It's the ongoing perfect storm, basically," he said.
The dollar slumped to a two-month low against the euro on Wednesday and held steady in Asian trade on Thursday. A weaker dollar makes commodities like oil denominated in the greenback more affordable for buyers with stronger currencies.
Phil Flynn at Alaron Trading said oil continued to gain momentum amid worries about the global economy, the dollar and other ills.
"Oil is a proxy for everything and an accurate reflection of our deep-seated fears and all of our insecurities," Flynn said during US trading hours.
Feer said the latest report released Wednesday by the US Energy Information Administration pointed to fairly weak demand in the United States, even though the traditional North American holiday motoring season is at its peak.
The report said stockpiles of crude had fallen by 2.0 million barrels in the week to June 27, while petrol stocks grew, Feer said.
OPEC secretary general Abdallah el-Badri said in an interview published Wednesday that US authorities should stop "harassing" members of the Organisation of the Petroleum Exporting Countries (OPEC) cartel.
He argued that sky-high oil prices were not due to "the myth" of the lack of supplies - as Western nations contend - but to speculation sparked by a crisis in the US subprime mortgage sector.
Global oil prices have doubled in the past year and have risen by 45 per cent since the start of 2008, when they breached US$100 for the first time, triggering fears over inflation and slower economic growth.
Protests against the soaring prices have also broken out around the world.
"I think it's becoming fairly clear that the only thing that's going to bring prices down is significant decline in demand growth in the Asia Pacific," Feer said.
- AFP/yb
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