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Oil highest since 2008 on Saudi pipeline report
March 1, 2012 / 4:06 AM / 6 years ago

Oil highest since 2008 on Saudi pipeline report

<p>An attendant prepares to refuel a car at a petrol station in Rome January 4, 2012. REUTERS/Max Rossi</p>

NEW YORK (Reuters) - Oil surged nearly 5 percent on Thursday to its highest level since crude’s record run in 2008 after a late report out of Iran of a pipeline fire in top exporter Saudi Arabia.

Iranian media reported an explosion on an unknown oil pipeline in the oil-rich Eastern Province of Saudi Arabia, although it was not possible to verify the report immediately.

Prices edged off highs after Dow Jones newswires reported a Saudi oil official said the report was untrue, according to CNBC television.

Markets have been on edge this year as threats of a supply disruption due to the West’s standoff with Tehran over Iran’s nuclear program have added to concerns about actual production losses from South Sudan, Yemen, Syria and the North Sea.

“The sharp move up on the pipeline story points to the market nervousness on anything related to supply problems,” said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.

Brent crude prices topped $128 a barrel in late post-settlement trade, levels not reached since July 2008 when the growing economic crisis sent oil spiralling to record peaks of more than $147 a barrel.

Prices were already up before the pipeline report, lifted by news Israel would test-fire a ballistic interceptor missile, escalating tensions over the crisis that has included tough sanctions against Iran.

International benchmark Brent crude climbed to $128.40 a barrel in post-settlement trade, after settling at $126.20, up $3.54 on the day.

U.S. April crude settled at $108.84 a barrel, up $1.77, before rising to $110.55 in late activity, the highest since May 2011.

Iran, the world’s fifth largest oil producer, has been struggling to sell its crude in the face of tightening U.S. sanctions and an EU embargo that kicks in on July 1. This has threatened to tighten global crude supplies.

However, U.S. Energy Secretary Steven Chu said that global oil producers have enough spare production capacity to make up for a drop in Iranian exports.

U.S. President Barack Obama said his administration will lay out as “many steps as we can” in coming weeks to unclog bottlenecks in the world’s top consumer that are helping to push up the price of gasoline and other fuels, a key issue for consumers as the economy struggles to recovery in an election year.

Data showing U.S. jobless claims fell last week -- the latest sign that the labor market recovery was gaining momentum -- also helped support prices.

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For a 24-hour technical outlook on Brent:

here

Global manufacturing PMIs

link.reuters.com/byv24s

Graphic on Japan, China, and India’s Iranian imports:

link.reuters.com/saf26s

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Additional reporting by Robert Gibbons and Janet McGurty in New York, Alex Lawler in London, Manash Goswami in Singapore; Editing by David Gregorio, Marguerita Choy, Dale Hudson and Bob Burgdorfer

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