SYDNEY - Oil surged through US$69 yesterday, with London Brent crude hitting record highs, on increased tensions between the United States and Iran over Tehran's nuclear aims and Nigerian supply disruptions.
US May crude traded up 37USc at US$69.11 a barrel, an 11-week high, adding to Monday's 2 per centrally to take prices in sight of last August's US$70.85 record.
Brent crude traded up 31c to US$69.06 a barrel, an all-time record for the contract.
Oil has risen more than 13 per cent this year, prolonging a rally that began at the start of 2002 with oil at US$20 as cash-rich investors, inspired by geopolitical tensions, buy up commodities.
"Concern about Iran never ceases to push prices," said Gerard Burg, minerals and energy economist at the National Australia Bank. "The market is not really factoring in the true impact of military action but the mere mention of it sends prices higher." Forward US contracts were trading even higher with crude for delivery during summer months this year above US$71 and northern hemisphere winter months at US$72 or above.
US President George W. Bush said yesterday that force was not necessarily required to thwart Tehran's nuclear ambitions and dismissed reports of plans for military strikes on Iran as "wild speculation".
Bush said diplomacy was his focus in the dispute with Iran, in his first comments since weekend reports in the New Yorker magazine and The Washington Post that the US Administration had stepped up military planning.
"Then there's Nigeria, also bubbling along, and no short-term view that things there will resolve themselves," said Burg.
Rebels continue to threaten attacks on Nigerian oil output, with about 500,000 barrels per day shut in since February.
With the loss of Nigerian oil set to encroach on the US summer driving season, traders are nervously eyeing falling fuel supplies hit by refinery maintenance to comply with cleaner US fuel standards.
