Oil prices retreat to US$68

12-Apr-06

Oil prices recoiled towards $68 on Tuesday from its $70 record, powered by supply threats in Iran, Nigeria and Iraq and strong demand in the US and China. Earlier in the day, London Brent crude spiked to an all-time high of US$69.70 and US crude rose to US$69.45. By afternoon, US crude settled at US$68.0 and London Brent was down to US$68.4. Oil has mounted 13% since January 1, extending a rally that began at the start of 2002 with oil at US$20 a barrel. However, despite high energy costs, global economies are soaring at their highest in real terms for a quarter of a century, keeping expectations for oil demand growth in '06 and '07 robust. Concerns over supplies from Iran, Iraq and Nigeria have been a big factor in oil's rally in recent months. Iran is at odds with the West over its atomic program, almost 25% of Nigeria's output remains knocked out and Iraq's exports are at their lowest since the US-led invasion.