Abu Dhabi: Global crude prices are likely to continue their upward movement this week, boosted by a weaker dollar, Iran's unresolved nuclear issues with the West and supply disruptions in some of the oil producing countries, experts say.
Crude prices in London shot up to a near 10-month high on Friday, closing above $125 (Dh459) a barrel after the United Nations nuclear watchdog said Iran had sharply stepped up its controversial uranium enrichment drive.
"Supply disruption and heightened geopolitical risks are supportive of higher energy prices. Higher oil prices will act as a drag on global economic activity, but keep in mind that the average price of oil (short-dated delivery Brent crude) was already quite high at $109 per barrel in 2011 and so far, the average for 2012 stands at $114 per barrel," Giyas Gokkent, chief economist at National Bank of Abu Dhabi (NBAD), told Gulf News.
According to the Institute of International Finance, a $10 per barrel rise in oil price means a $180 billion transfer from oil importers to oil exporters; a rise in prices to $140 per barrel would mean a $500 billion transfer.
A public promise from Saudi Arabia, the world's top oil exporter, to pump oil at its full capacity would calm oil markets as well as gasoline prices, US senator Charles Schumer said in a letter to Secretary of State Hillary Clinton. In the letter, Schumer asked Clinton to urge the Saudi government to increase production to full capacity of 12.5 million barrels per day — an increase of 2.5 million barrels.
That would compensate for a reduction in Iran's exports of 2.2 million barrels per day. Oil sales from Iran face tough new sanctions as a result of the standoff over its nuclear development.
