Threat of War Drives up Oil Prices
The price for Brent oil has hit a seven-month high at $66 per barrel. That is investors' reaction to heightening tensions over Iran. The price has risen 10 percent since March 23, when it became known that Iran had seized 15 British marines. The rise was particularly notable yesterday (2-3 percent) after a rumor circulated that the Iranian Navy attacked an American ship. Even though the rumor was quickly denied, Brent rose to $66.40 per barrel, and Russian Urals hit $62.80, its highest mark since September 4, 2006.
Bank of Moscow analyst Vladimir Vedeneev estimated that concern over war in Iran has added $3-4 to the price of every barrel of oil. The United States has begun military exercises in the Persian Gulf, and Iran has held several military exercises, the last of which took place late last month. According to OPEC, Iran produces 3.8 million barrels of oil per day, of which it exports 2.3 million barrels, or 5 percent of world production. It is the largest supplier of oil to Japan and China.
Experts say that, if a crisis develops, oil quotations could top $70 per barrel and even surpass last year's record $78.50. “If the situation doesn't change, prices may rise by another $10 per barrel,” warns Vedeneev. Fear of war “adds to the attractveness of raw materials markets, such as Russia,” noted Alfa Bank trader Konstantin Shapsharov. Should war begin, however, “a new wave of withdrawals of money by foreign funds will begin as they reassess the risks of developing countries,” he continued.
www.kommersant.com
All the Article in Russian as of Mar. 29, 2007
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