Q4-2006 supply concerns propel oil prices above US$60

29-Jun-05

Oil prices rose by a dollar to a fresh record above US$60 a barrel - but a look at demand globally indicates that high prices have had very little negative impact on global economic growth. US crude for August delivery traded at US$60.95 a barrel, up $1.11, and London Brent touched a record US$59.59 a barrel. Economic resilience is considered to have encouraged speculators to test consumer ability to absorb higher costs. Will an economic slowdown be the only answer to tame prices - as demand continues to ride high, barely affected by sky rocketing prices Fresh worries about oil policy under Iran's new hardline president- the ultra-conservative Mahmoud Ahmadinejad along with supply concerns in Q4 2006 have propelled prices. OPEC too may raise its ceiling by 500,000 bpd to stabilize prices if there is a rise in demand, but this matter is still considered to be at the discussion stage within the cartel. The extra oil may come from Saudi Arabia, and possibly from the United Arab Emirates. A short-term supply of 50,000 to 100,000 bpd could be generated from Kuwait.