International Herald Tribune - 1/6/2006
Crude oil rose Tuesday amid heightened tension in the dispute over Iran's uranium enrichment program.
Iran will not halt its pursuit of nuclear technology, a Foreign Ministry spokesman said, raising concern that oil supplies will be disrupted. Iran is one of the largest oil producers and controls access to the waterway used by the bulk of the region's oil.
Crude oil for July traded at $72.03 a barrel, up 74 cents, on the New York Mercantile Exchange.
"Geopolitical instability has pushed the price up," said Veronica Smart, an analyst for the Energy Information Center. "And if there's a major hurricane season I don't think there'll be a price ceiling. The right combination of events would mean $100 a barrel isn't unrealistic."
Foreign ministers of the permanent members of the United Nations Security Council and Germany could meet in Vienna soon for talks on incentives to get Iran to quit enriching uranium.
"Halting or stopping enrichment is not on the agenda," said the Iranian Foreign Ministry's spokesman, Hamid Reza Asefi.
Oil prices rose last month after attacks by militants cut Nigerian output, U.S. gasoline stockpiles fell for eight weeks and Washington sought Security Council sanctions against Tehran.
"These sort of geopolitical tensions are elevating prices above levels that we see as supported by fundamentals," Gerard Burg, energy and minerals economist at National Australia Bank in Melbourne, said.
"At the same time, though, those fundamentals are very strong."
Gold rose as investors bought the precious metal as an alternative asset after the dollar fell against the euro.
The dollar fell on speculation that the nomination of Goldman Sachs Group's chief executive, Henry Paulson Jr., as U.S. Treasury secretary would not derail the Bush administration's push for a weaker currency. A weaker dollar encourages investment in gold.
Gold futures for delivery in June rose $2.90 to $653.90 on the New York Mercantile Exchange.