World oil prices strike record highs on Turkey-PKK tensions
NEW YORK (AFP) — World oil prices soared to record highs Monday with New York prices smashing through 86 dollars as tensions mounted between Turkey's government and Kurdish rebels located in northern Iraq.
Oil values jumped after Turkey's army said at the weekend that it had shelled Iraqi territory following an attack on a military outpost with rockets and gunfire from across the border by PKK rebels.
New York's main oil futures contract, light sweet crude for delivery in November, soared a hefty 2.44 dollars to close at 86.13 dollars a barrel amid the heightened tensions across the Turkish-Iraq border.
London oil prices also surged amid the concerns. Brent North Sea crude for November delivery settled up 2.20 dollars at a record 82.75 dollars a barrel.
"The tensions on the Turkish-Iraqi border have really pushed the price up," said Adrian Bingham-Walker at CMC Markets.
"It's a new supply threat and prices have just kept on hitting new highs today. As it's hitting these highs, it's attracting more and more buyers," Bingham-Walker said.
Aside from the Turkish-PKK fears, oil prices have also been boosted by worries over stretched global energy supplies. Traders are fearful that heating fuel demand will soar during the northern hemisphere winter, especially in the United States.
Oil prices spiked Monday as the Turkish government met to prepare a motion seeking parliamentary approval for a potential military incursion into neighbouring Iraq to crack down on Kurdish rebel bases there.
The motion will be sent to parliament "once it is signed by all the ministers," a Turkish government official told AFP.
The Turkish cabinet was expected to seek a one-year authorization for a military operation in northern Iraq, where an estimated 3,500 rebels of the separatist Kurdistan Workers' Party (PKK) are located.
Oil traders are concerned a worsening of the situation could affect Iraq's oil market and wider crude markets as western governments appeal for calm.
The White House urged "restraint" from Turkey.
"We urge the Turks to continue their discussions with us and the Iraqis, and to show restraint from any potentially destabilizing actions," said White House spokesman Gordon Johndroe.
Oil traders "are still worried about possible tension with Turkey and Iraq on the northern borders," said Sucden analyst Robert Montefusco.
"It's being discussed in Turkish parliament at the moment over whether it is legal for them to go and invade.
"There's no lost production at the moment, so it's only perceived that we could lose some production if any of the pipelines are affected in that region from Iraq," Montefusco said.
"That is the main concern at the moment."
The Organization of the Petroleum Exporting Countries (OPEC) meanwhile forecast that 2007 world oil demand growth would stand at 1.3 million barrels per day (bpd).
The estimate, contained in OPEC's monthly report for October, was unchanged from the previous figure given in September.
The Vienna-based cartel added that demand for fuel and heating oil in the fourth quarter to December "is forecast to be strong."
World oil demand growth during the period "is estimated to follow typically high seasonal consumption (patterns) due to the expected normal winter in the northern hemisphere," the report said.
OPEC pegged world oil demand growth at 1.8 million bpd for the last three months of 2007.
