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Oil prices surge amid rumors of clash in Iran
AFP
NEW YORK
Petroleumworld.com 03 29 07
Oil prices shot up Wednesday to six-month highs as Britain froze ties with Iran and rumors swirled about a possible military clash between the West and the Islamic Republic.
New York's main oil futures contract, light sweet crude for delivery in May, jumped 1.15 dollars to close at 64.08 dollars a barrel.
At one point overnight crude had rocketed to 68.09 dollars, the highest level since September 6 on rumors of a military conflict in Iran.
The price of Brent North Sea crude for May delivery leapt 1.18 dollars to settle at 65.78 dollars a barrel. Overnight, Brent crude surged as high as 69.00 dollars -- last seen on September 4.
The rumors put a scare into the market even though they were quickly proved false, said Eric Wittenauer at AG Edwards.
"Rumors began to fly that there was a military confrontation with Iran," he said.
"One rumor suggested the Brits went in to rescue their Royal Marines and sailors.
Another said a US ship in the Gulf was fired on by Iranian forces. Quickly the Pentagon, the White House, and Central Command came out denying there was any military confrontation.
But the analyst said that "with geopolitical tensions so high, the market can quickly react to any further escalation ... it gives us an idea what would happen to prices immediately following a US preemptive strike, an Iranian launch, or a UK offensive to retrieve their captured soldiers."
As well as its standoff with Britain over detained sailors, Iran refuses to bow to international pressure over its disputed nuclear program.
Britain announced a freeze on all official ties with Iran over the Islamic state's detention of sailors and marines in the Gulf.
A British servicewoman detained along with 14 other sailors will be released "within a day or two," Iranian foreign ministry spokesman Mohammad Ali Hosseini told AFP on Wednesday.
Iranian television later broadcast footage of the 15 captured last Friday -- a move Britain condemned as "completely unacceptable."
British Foreign Secretary Margaret Beckett announced the freezing of ties shortly after Prime Minister Tony Blair vowed to increase pressure on Tehran, which he said faced "total isolation."
"We are now in a new phase of diplomatic activity .... We need to focus all our bilateral efforts during this phase on the resolution of this issue," Beckett said.
Iran insisted Wednesday that the personnel it detained last week were in Iranian waters, but said it was "confident" London and Tehran can resolve the standoff.
The statement came minutes after British military officials unveiled documentary evidence they said showed the Britons were 1.7 nautical miles (3.15 kilometers) inside Iraqi waters when they were detained.
Aside from Iran, dealers pored over a weekly update on US energy inventory data. Crude stockpiles fell by 900,000 barrels to 328.4 million in the week to March 23, the Department of Energy said.
That compared with a market forecast of an increase of 2.3 million barrels.
AFP 28 1950 GMT 03 07
Copyright© 2007 AFP. All Rights Reserved.
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