Crude oil futures yesterday broke record highs for the seventh consecutive session on lingering concerns about supply disruptions in Iraq and Russia at a time when global oil production is close to capacity.
IPE Brent for September delivery peaked at $41.65 (€33.92) a barrel, exceeding Friday's record by 15 cents, before easing to $41.55, up 92 cents on the day.
September Nymex WTI moved within 5 cents of $45 a barrel when it smashed a new record of $44.95 a barrel, exceeding the record from the previous session of $44.77, before easing to $44.87, a gain of 92 cents on the day.
The latest surge followed reports that Iraqi oil officials said exports from its two southern oil terminals had been suspended because of fighting near the complex following threats by the militia linked to rebel Shia cleric Muqtada al-Sadr, who threatened to bomb the pipeline unless exports were halted immediately.
Iraqi officials said they could export oil for another two days from existing storage.
Oil flows in the southern Iraq pipelines, which deliver all of the country's 1.9 million barrels a day (b/d) in exports, have stopped several times this year because of terrorist attacks. Exports from the northern pipeline - from the oilfields in Kirkuk to the Ceyhan terminal in Turkey - have also stopped in recent months because of continued terrorist attacks on the pipeline.
The Iraqi oil ministry in Baghdad came under attack yesterday, damaging the building.
Prices also strengthened on reports that a Russian court upheld the seizure of one of Yukos's major oil producing units by bailiffs charged with collecting a $3.4 billion tax debt.
Mr Purnomo Yusgiantoro, OPEC president, said it may raise its production ceiling to match output when it meets on September 15th. OPEC, including Iraq, is producing about 30 million b/d - a 25-year high. Its self-imposed output limit, excluding Iraq, is 26 million b/d.
Spare capacity is thought to total less than two million b/d.
Oil prices have rallied more than 30 per cent this year as rapid demand growth, especially in the US and China, has left little leeway for any supply disruptions. Consumption is accelerating at its fastest pace in more than 20 years.
The International Energy Agency, adviser to 26 industrialised nations on energy policy, said it was stepping up consultation with member countries on the issue of a possible release of strategic oil stocks.
However, US energy secretary Mr Spencer Abraham said yesterday that the US government would continue to build its strategic oil reserves.
"We clearly will use our oil reserves if there is a severe disruption" in oil supplies, Mr Abraham said. "That hasn't happened."
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