Motorists and business to be hit as oil hits a new record of $143 a barrel in New York
Crude oil prices rose to a record high of over $143 per barrel yesterday due to tensions in the Middle East, stoking fears that the global economy is being throttled by a double whammy of sky high energy prices and the credit crunch.
Oil for delivery in August hit a record high of $143.67 in New York before falling to $140.31 a barrel, after a rising dollar prompted some to sell. The development will put further pressure on industry and motorists.
Traders were concerned by comments from the commander of Iran’s Revolutionary Guards who warned that the country would launch a missile counter-attack if Israel were to take military action over Tehran’s nuclear programme. General Mohammad Ali Jafri also threatened to cut off access to the Strait of Hormuz, a strategic waterway which transports around 60 per cent of supply, and announced plans to dig mass graves for 320,000 enemy soldiers. Iran’s fundamentalist regime is the world’s fourth largest provider of global oil.
Shares in heavyweight oil firms BP, Royal Dutch Shell and Total all rose between 1.4 and 2 per cent, although airlines British Airways, Lufthansa and Air France-KLM – all heavy oil consumers – shed between 1.5 and 3 per cent.
An emergency summit in Saudi Arabia last month failed to ease the surging prices, despite the UK pledging to add another 200,000 barrels a day to current production levels. Two years ago, oil was trading at about $63 a barrel.