Oil diverge after breaching $104 again

17th February 2011, Comments 0 comments

World oil prices diverged on Thursday, after earlier breaching $104 per barrel in London, as traders eyed simmering geopolitical tensions in the crude-rich Middle East.

Brent North Sea oil for delivery in April dipped 21 cents to $103.57, after earlier touching $104.30 in Asian trade.

New York's main contract, light sweet crude for March, added ten cents to $85.09.

"It is all about the risk and tensions in the Middle East that currently dominate the oil markets," said Sucden analyst Myrto Sokou.

"Any renewed concerns about geopolitical uncertainty could make crude oil prices spike," she warned.

Brent oil jumped to $104.52 on Wednesday -- its highest level since late September 2008 -- after Israel said Iran was sending two warships into the eastern Mediterranean.

Israeli Foreign Minister Avigdor Lieberman said two Iranian warships were sailing north in the Red Sea headed for the Suez Canal for the first time since Iran's 1979 Islamic revolution, branding this a "provocation."

However on Thursday, Egypt's Suez Canal Authority said it has received no request to allow Iranian warships passage to the Mediterranean.

"We did not receive any request for the passage of Iranian warships," Ahmed al-Manakhly, head of the canal's operations room, told AFP, adding he had no idea whether any such ships were nearing the canal.

"Any warship needs approval from the defence ministry and the foreign ministry. We have seen no such approval. Before they pass, I need to have such an approval in my hand," he said.

The developments came as violence erupted in Bahrain, while there were also demonstrations in Libya and Iran.

Bahrain's opposition demands the resignation of Prime Minister Khalifa bin Salman al-Khalifa's government following a deadly raid on anti-regime protesters, a Shiite opposition bloc said on Thursday.

"The opposition groups, including Al-Wefaq, have issued a statement demanding the government resign and calling for the formation of a new government to investigate this crime," said Al-Wefaq bloc's leader, Ali Salman.

A police raid early on Thursday left four people dead and scores wounded in the capital of the Shiite-majority Gulf state ruled by a Sunni dynasty.

Sheikh Khalifa, an uncle of King Hamad, has served as prime minister ever since Bahraini independence in 1971.

Tensions in the Middle East, home to major Organization of the Petroleum Exporting Countries (OPEC) members, tend to push oil prices higher as traders worry over the potential for supply disruption.

"Geopolitical tensions in the Middle East are keeping oil prices up," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.

Massive street protests in Egypt this month that ended president Hosni Mubarak's 30-rule have inspired mass actions in other parts of the politically volatile region.


© 2011 AFP

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