Oil prices have surged to a new high of $47 a barrel after a new threat by rebel militia against Iraqi oil facilities, and as the United States says inflation has stayed in check despite rising energy costs.
US light crude rose 26 cents to $47.01 a barrel today after a 93-cent jump on Tuesday. London Brent rose 15 cents to $43.14 a barrel. US oil has set all-time highs in all but one of the last 14 trading sessions and is nearly $10 a barrel, 27 per cent higher, than at the end of June.
In Iraq, a group claiming links to rebel cleric Moqtada al-Sadr said it was responsible for setting an oil well on fire and vowed to attack the country's main southern pipeline if US forces besieging al-Sadr in Najaf do not leave the holy city.
"We set ablaze an oil well in Amara. This is a simple warning to the government of (Prime Minister Iyad) Allawi and to occupation forces, that we will bomb the main south oil export line if they do not leave Najaf within 48 hours and end the siege," said the Internet statement dated August 16th and signed by The Secret Action Group of The Imam Mehdi Army.
The southern pipeline has been closed for the most part since a sabotage attack on August 9th, restricting export flows to about one million barrels daily, half normal supply rates.
Some Asian countries, increasingly worried about oil prices, are planning measures to conserve energy or to cushion its impact.
Thailand is drafting plans to make motorists pay to use main Bangkok streets and encourage shops and cinemas to close earlier, while South Korea may consider cutting oil tax rates at the end of August, in a bid to shield the economy from red-hot oil prices.
Leading OPEC power Saudi Arabia said this week it is pumping as much as possible in a bid to lower prices to $25-$30 a barrel but analysts fear global production capacity is close to its limit.
"Any significant capacity is seen as unreliable - Iraq, Russia and Venezuela for instance. Ongoing violence in Iraq is reinforcing the mood," said Mr David Thurtell, commodities strategies at Commonwealth Bank of Australia.
Yesterday, Venezuela aid it would propose at a September meeting that OPEC raised its official oil price target band from $22-$28 to $28-$35 a barrel to reflect higher crude values. Such a policy would mean OPEC defending a higher price target.
"(Oil) prices have risen again but that is not because of Venezuelan or OPEC policies," Venezuela's OPEC governor, Mr Ivan Orellana said. He said the US-led war on terror had "introduced in the market instability and volatility in the price of oil."