Associated Press
08.13.2004

Oil prices kept climbing Friday on concerns about vulnerable and stretched supplies. Energy analysts said the uncertainty could be adding as much as $8 a barrel to prices, pointing to a continuing insurgency in U.S.-occupied Iraq, suspicions terrorists could again strike Saudi Arabia's production facilities, and unrest elsewhere.

Crude oil for September delivery rose 30 cents to $45.80 a barrel in midday trading Friday on the New York Mercantile Exchange, past the fresh record struck Thursday of $45.50. September Brent crude rose 23 cents to $42.52 on London's International Petroleum Exchange, threatening the previous day's record high - not adjusted for inflation - of $42.29 per barrel.

"The sentiment in the market is that there are more bad things going to happen to the market than good things," said Sam Dale, bureau chief at Energy Intelligence in Singapore.

"By 'bad things' we mean supply restrictions: Speculators are looking at things like an attack on Saudi Arabia, more disruption of exports from Iraq, civil unrest in Nigeria, strikes and civil unrest in Venezuela," Dale added.

Also, Russian oil giant Yukos is locked in a battle against bankruptcy in that country's courts over a disputed $3.5 billion back-tax bill.

"If any of those (bad events) happen, they take crude off the market," said Dale. "The problem with that is ... where is the extra oil going to come from?"

Oil prices have risen about 3.5 percent over the past week, pushing to a series of new highs. However, when adjusted for inflation, oil still costs about $12 a barrel less than it did leading up to the first Gulf war.

Heavy fighting in southern Iraq renewed fears of a disruption of Iraq's vital oil supplies, and traders said the tense situation would help keep crude prices high. Iraq exports 1.7 million barrels a day of oil, or about 2 percent of daily global consumption.

U.S. and Iraqi forces pressed on Friday with an offensive on the Iraqi city of Najaf to quell an uprising by militiamen loyal to Shiite cleric Muqtada al-Sadr.

Al-Sadr loyalists have threatened to blow up oil pipelines and port infrastructure if an offensive is launched on the city's Imam Ali shrine.

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