Oil prices spike after Iran seizes yacht | Shanghai Daily

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Oil prices spike after Iran seizes yacht

OIL prices jumped yesterday after Britain said a racing yacht was seized by Iran in the Persian Gulf and that five U.K. nationals were being held.

Benchmark crude for January delivery climbed US$1.23 to settle at US$77.28 a barrel on the New York Mercantile Exchange after seesawing around US$76 for much of the session.

British officials said yesterday that the yacht may have strayed inadvertently into Iranian waters when it was stopped last Wednesday.

Prices rose on the specter of some kind of confrontation between the British and the Iranians, one of the world's biggest producer of oil.

Two years ago 15 British military personnel were seized in the Gulf by Iran. Iran charged them with trespassing in its waters, but all were eventually freed.

In December, for the first time in about 10 years, oil prices are expected to be twice what they were a year ago, says Tom Kloza, chief oil analyst for OPIS.

Crude prices have been trading between US$75 and US$82 a barrel for the past month or so. Prices hit US$33.87 a barrel on Dec. 19, 2008.

The rapid rise in prices is worse for consumers this time, however. Before prices doubled in early 2000, a barrel of crude cost about US$10.

Prices tumbled US$1.61 on Friday and were down as much US$5.57, or 7 percent, after Dubai's investment arm, Dubai World, asked for a six-month reprieve on payments for about US$60 billion in debt. The drop was the biggest decline in oil prices since April 20.

Energy prices regained some of that ground and by Sunday, the United Arab Emirates took steps to avert any run on banks by panicked depositors.

By yesterday, it appeared oil was trading once again on the same factors that have heavily influenced prices for several months - the value of the dollar and global stock markets.

Oil prices usually climb when the dollar falls, as dollar-denominated commodities such as oil and gold become cheaper to investors holding other currencies.

The safe-haven dollar mostly slipped yesterday, with the euro rising back over US$1.50, but managed to hold above 14-year yen lows as investors held their breaths on the Dubai debt crisis.

In other Nymex trading, heating oil for December delivery added 5.6 cents to settle at US$2.0181 a gallon. Gasoline added 7.46 cents to settle just above US$2 a gallon. Natural gas shed nearly 7 percent, or 34.4 cents to settle at US$4.848 per 1,000 cubic feet

In London, Brent crude for January delivery rose US$1.29 to settle at US$78.47 on the ICE Futures exchange.



 

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