First Published: 2006-01-20

Bin Laden’s tape sends oil prices rocketing

Oil prices surge past 67 dollars on Al-Qaeda leader’s threat of new attacks against US.


Middle East Online

By Melanie Lee – SINGAPORE

Speculation by oil traders could push prices to 70 dollars a barrel

Oil prices surged past 67 dollars a barrel in Asian trading Friday after Al-Qaeda leader Osama bin Laden threatened new attacks against the United States, dealers said.

Bin Laden's latest threat, made in an audiotape broadcast over Al Jazeera television, further fuelled market tensions triggered by potential supply disruptions in major oil producers Iran and Nigeria, they said.

At 3:15 pm (0715 GMT), New York's main contract, light sweet crude for delivery in February, was up 27 cents at 67.10 dollars a barrel, the highest in four months, from its close of 66.83 dollars in the United States Thursday.

"The bin Laden tape has caused a knee-jerk reaction on the part of the market," said Victor Shum, a Singapore-based analyst with US energy consultancy Purvin and Gertz.

He said speculation by oil traders could push prices to 70 dollars a barrel, which would be just below the all-time high of 70.85 dollars on August 30, 2005 after Hurricane Katrina hammered US oil production facilities in the Gulf of Mexico region.

"There is certainly the possibility of prices hitting 70 dollars. The recent events have attracted speculators and oil has become a lot like an investment," Shum said.

The voice on the tape, which was authenticated by the US Central Intelligence Agency (CIA) to be that of the fugitive Al-Qaeda leader, also offered the American people a conditional "long term truce".

Washington flatly rejected the offer.

The tape marks the first time that bin Laden has been heard from in more than a year, his silence adding to feverish speculation about the fate of the man behind the September 11, 2001 attacks on the United States and a host of other terror strikes worldwide.

"The delay in similar attacks is not because of the failure to penetrate security measures taken ... These operations are being prepared and you will see them in your heartland when they are ready," the voice said, addressing the American people.

Meanwhile, the geo-political fallout from Iran's decision to resume sensitive nuclear activities and unrest in Nigeria, Africa's biggest oil producer, remained key ingredients to the market's volatility.

"Geo-politics is behind the surge in oil pricing... The Nigerian unrest has caused a disruption in supply," said Shum.

Anglo-Dutch energy giant Shell, Nigeria's biggest producer and so far the main target of the attacks by separatist militants, has been forced to cut output by 226,000 barrels per day since the crisis began over a week ago.

Iran, the second biggest crude oil producer in the OPEC cartel, has warned Western powers that sanctions over its controversial nuclear programme could provoke a world oil crisis.

The geo-political situation overshadowed the US Department of Energy's report on Wednesday that US energy stockpiles rose across the board in the week ended January 13, news that would normally depress oil prices.

Crude stocks rose 2.7 million barrels over the week to total 321.4 million barrels, it said.

Supplies of distillate products, used to make heating fuel and diesel, rose 900,000 barrels to 134.7 million. Reserves of gasoline, or petrol, were up 2.8 million barrels at 211.6 million.


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