Terror fears drive up oil price

Crude oil futures in New York closed on Tuesday at a price of $US42.33 ($A 59.75) a barrel.

A weekend attack in Saudi, in which 22 people died, has heightened fears about terrorist disruptions to energy supplies.

New York’s light sweet crude contract for delivery in July jumped past $US42 for the first time ever, trading as high as $US42.38.

A slight dip at the close of trade still left the contract up $US2.45 or 6.1 percent from Friday.

In London, the price of benchmark Brent North Sea crude oil for July delivery soared by $US2.50 to $US39.08 ($A55.17) in closing trade.

Both markets were closed Monday for a public holiday.

“The market is in a panicking psychological mood,” said analyst Mike Fitzpatrick at Fimat USA.

The attack in Saudi Arabia was damaging, he said even if no oil infrastructure were damaged, because “it sends a psychological message, especially for workers.”

Meanwhile, Britain’s chief finance minister Gordon Brown has attempted to speak to the oil ministers of every OPEC nation in an attempt to persuade the cartel to boost oil production and thus bring down prices.

Mr Brown, the chancellor of the exchequer, has been “hitting the phones” ahead of an OPEC meeting in Beirut this week, the Times said in its Wednesday edition, without citing sources.

Mr Brown was hoping to hammer home the message that consumer nations wanted an immediate production rise, after oil prices rocketed to an all-time high.

Ministers from the Organisation of Petroleum Exporting Countries arriving in Beirut ahead of Thursday’s formal meeting gave clear signals that production would be increased.

Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah said that his country was ready to accept an increase in OPEC’s oil production ceiling to 26 million barrels per day from the current 23.5 million.

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