Crude values spike by one dollar as tensions between Georgia and Russia intensify

11-Aug-08
Possible supply disruptions anticipated to be caused by escalating tensions between Georgia and Russia has spiked world oil prices by over a dollar in Asian trade. As exports have been halted via two Georgian ports due to the fighting, New York's light sweet crude for September delivery, rose to US$116 a barrel, while London's Brent North Sea crude for September delivery was up at US$114.40. Oil rose despite a stronger dollar. The euro fell to $1.4975 against the dollar in Asian currency trade, while the dollar is holding near 110 yen. Earlier, Russian warplanes had staged a raid near the Baku-Tbilisi-Ceyhan (BTC) pipeline, the world's second longest. Though Georgia is not an oil producer, its importance is maintained as it is a key transit point for crude and gas exports from Azerbaijan to markets in Europe. While Georgia claims ts troops have retreated from South Ossetia province and are honoring a cease-fire, Russia disputed the claim, and U.S. officials said Moscow was expanding its blitz into new areas. The province broke away from Georgian control in 1992. Georgia, whose troops have been trained by American soldiers, began an offensive to regain control over South Ossetia last week, launching heavy rocket and artillery fire and air strikes that pounded the regional capital Tskhinvali. Georgia says it was responding to attacks by separatists. Russia has granted passports to most of the region's residents, and separatist leaders there have sought to have the province absorbed back into Russia.
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