Oil slips after breaching $104 again

17th February 2011, Comments 0 comments

World oil prices fell lightly on Thursday, after briefly breaching $104 again, as tensions eased over supply concerns in the Middle East.

Brent North Sea crude for delivery in April dipped 12 cents to $103.66, after earlier touching $104.30 in Asian trade.

New York's main contract, light sweet crude for March, slipped 28 cents to $84.71.

"This morning, crude oil prices retreated ... as concerns eased about tensions in the Middle East," said Sucden analyst Myrto Sokou.

"It seems that it is all about the risk and tensions in the Middle East that currently dominate the oil markets."

"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 if 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, with reports of several killed as security forces attacked demonstrators in Manama. There were also demonstrations in Libya and Iran.

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

"This is all due really to the news that Iran is going to send ships to the Suez Canal and also other news about people protesting in other countries besides Egypt," Shum told AFP.

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.

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 demanding greater freedoms.


© 2011 AFP

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