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Oil prices down by a dollar in Asian trade

business Updated: Jul 14, 2008 09:17 IST

AFP
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Oil prices fell by more than one dollar in Asia on Monday after supply worries helped push prices to a record high last week.

New York's main oil contract, light sweet crude for August delivery, fell 1.15 dollars to 143.93 dollars a barrel.

The contract hit an intra-day peak of 147.27 before closing at 145.08, up 3.43 dollars on the New York Mercantile Exchange Friday.

Brent North Sea oil for August delivery fell 1.17 dollars to 143.32. On Friday Brent jumped as high as 147.50, a new intra-day record, before settling up 2.46 dollars at 144.49 in London.

Investors were taking profits after last week's record surge but the decline was likely to be brief as geopolitical tensions in the oil-rich Middle East and unrest in key producer Nigeria provided underlying support, dealers said.

"It seems clear that geopolitics will continue to provide fuel for the seemingly relentless rally, with Iran and Western nations still at a standoff over the Islamic republic's pursuit of a uranium enrichment programme," said senior oil analyst Linda Rafield, of global energy information provider Platts.

Tehran insists its nuclear drive is aimed solely at generating energy but some Western nations fear it could be aimed at making an atomic bomb and have called for a freeze of uranium enrichment.

Iran is the second biggest crude producer in the Organisation of the Petroleum Exporting Countries (OPEC) cartel. The country's output is about four million barrels per day.

OPEC has said the cartel would not be able to replace Iran's oil production if supplies were halted in case of a war with Israel or the United States.

"A loss of Iranian barrels on world markets would only tighten supply-demand balances further," Rafield said in a report.

Exacerbating traders' supply concerns is the ongoing unrest in Nigeria where violence in the southern delta region has already reduced the country's total oil production by a quarter since January 2006.

In the latest security incident, Nigerian forces said Saturday they were trying to track down the kidnappers of two German construction workers in Port Harcourt, the country's oil hub.

Production in Brazil was threatened as workers for the country's state-run oil giant Petrobras were to start a five-day strike on Monday. Brazil is the world's 12th largest crude producer, ahead of Nigeria.

Oil prices have almost doubled over the past year and have soared since breaking through 100 dollars at the start of the year. The record prices have sparked protests around the world amid fears for economic growth.