Oil prices might hit record on Iran, Nigeria concerns
April 7, 2006
By Mark Shenk
New York - Oil analysts have raised their 2006 forecast to a record average price of $63 (R379) a barrel on concern that unrest in Nigeria and the Iran nuclear showdown will reduce exports.
The average price of crude oil on the New York Mercantile Exchange would rise $6.30, or 11 percent, from last year, according to the median estimate of 30 strategists in a Bloomberg survey. Analysts taking part in the survey three months ago had predicted that prices would average less than $52 a barrel this year.
Oil was at $67.73 a barrel in New York early yesterday morning. Its price has tripled in the past four years. Last year's average price of $56.70 was a record for a full year.
Until the past six months, analysts and strategists incorrectly predicted lower prices.
Kevin Norrish, the director of commodities research for Barclays Capital, said oil might reach the mid-$70s. Acceleration of the world economy would lead to faster energy demand growth.
Oil prices were bolstered in the first quarter by speculation that Iran might cut exports to retaliate against any UN sanctions related to its nuclear programme.
In Nigeria, the kidnapping of oil workers and other violence in January showed a growing threat to the country's exports. And in Iraq, violence and instability plagued efforts to boost output. Iraqi oil production was about 1.8 million barrels a day in March, or 7 percent below the average output in 2004 and 2005.
The average price for London Brent crude was likely to be $61 for the full year, according to the survey.
Some relief from high prices might come next year, according to the survey.
Crude oil in New York would average $57.90 a barrel in 2007. Brent would average $55. - Bloomberg
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