Oil surges above $66 amid Iran tensions

Crude oil prices surged above $66 a barrel Thursday, driven to a new six-month high by concerns that strained relations between Iran and the West could put oil exports in jeopardy as U.S. gasoline supplies wane and demand swells.

Light, sweet crude futures for May soared $1.95 to settle at $66.03 a barrel on the New York Mercantile Exchange, after rising as high as $66.50. It was the highest settlement price since Sept. 8, 2006, when crude finished at $66.25, but still far off the record trading high of $78.40 reached in mid-July.

Traders aren't saying they believe war with Iran is likely, but in an environment of high demand and falling domestic supplies, they maintain the effects of a large-scale conflict on the energy markets could be huge.Iran is positioned along the Strait of Hormuz, through which tankers ship about 17 million barrels of crude oil per day, according to the Energy Information Administration. That accounts for two-fifths of the world's crude oil traded by tanker, and about one-fifth of total oil production. The exports exiting the narrow waterway are bound for the United States, Western Europe and Japan.

(2007-03-30 07:26:51 SGT) [Energy] Permalink

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