Singapore: Oil prices firmer in Asian trade on North Korea, OPEC factors
Oil prices rebounded above 60 dollars in Asian trade Monday on concerns North Korea’s nuclear test will embolden Iran to pursue its own nuclear programme, dealers said.
A report that the president of the Organisation of Petroleum Exporting Countries (OPEC) has called on fellow cartel members to cut production also helped push prices higher, they said.
At 2:25 pm (0625 GMT) New York’s main contract, light sweet crude for November delivery, was up 45 cents to 60.21 dollars a barrel from 59.76 dollars in late US trades Friday.
Brent North Sea crude for November climbed 52 cents to 60.35 dollars.
One oil market analyst said North Korea’s announcement it had conducted its first ever nuclear test helped drive prices higher Monday on concerns this will encourage oil-producer Iran to pursue its own nuclear programme despite the threat of UN sanctions.
“Geopolitical risk has increased after the North Korean nuclear test,” said Dariusz Kowalczyk, senior investment strategist with CFC Seymour in Hong Kong.
Although the test has no direct impact on energy prices because Stalinist North Korea is not an oil producer, its action is likely “to embolden Iran in its own pursuit of nuclear weapons,” Kowalczyk said.
“This will increase risks to supply stability of oil,” he added.
Iran’s President Mahmoud Ahmadinejad vowed to impose retaliatory sanctions on world powers if Iran is penalised by the United Nations Security Council over its nuclear programme, state media reported.
“We will also impose sanctions on them,” Ahmadinejad told reporters late Sunday. He did not specify what kind of retaliatory action this would involve.
Iran, OPEC’s second largest producer, has insisted it will not use oil as a weapon in the standoff.
The world’s fourth biggest oil producer has refused to suspend uranium enrichment despite moves at the UN Security Council to draft a sanctions resolution against it for failing to halt sensitive nuclear work.
In a meeting late on Friday, representatives of the five UN Security Council permanent members plus Germany agreed to discuss sanctions against Tehran.
Iran’s insistence on its right to enrich uranium lies at the heart of the crisis. The process can be used to make nuclear fuel and, in highly extended form, the fissile core of an atomic bomb.
Tehran insists its nuclear programme is solely for peaceful energy needs.
Iran on Sunday threw its support behind moves by OPEC to hold an emergency meeting to cut a long-standing output quota to shore up slumping oil prices.
“Iran supports any OPEC production cut,” said Oil Minister Kazem Vaziri Hameneh, according to the state news agency IRNA.
The Financial Times newspaper reported Monday that Nigerian Oil Minister and OPEC president Edmund Daukoru has urged other cartel members to put into effect an agreement to slash oil output.
The 11-member cartel has maintained an output quota of 28 million barrels per day since June 2005.
“I think that the market is taking some heart from the apparent consensus by some of the OPEC members to voluntarily cut their production by a million barrels a day,” said Dave Ernsberger, Asia director of global energy information provider Platts.
“But the market is not taking too much heart from it until there’s an official statement that there will be a concerted action from OPEC as a whole.”
The price of oil on world markets has slumped by about 20 percent in recent weeks owing to easing supply concerns.
Ernsberger said prices are also supported by higher US stocks of refined crude oil products, indicating sufficient supplies ahead of the winter season. (*)
Copyright © 2006 ANTARA
