Oil Jumps on Iran's Threat

Elena
05 Jun, 2006
New York City

Light, sweet crude for July delivery rose $1.02 to $73.35 a barrel in mid-afternoon Asian electronic trading on the Nymex in Singapore. The contract rose Friday to $72.33 after eight foreign workers on a drilling rig off the coast of Nigeria were kidnapped and then released on Sunday. July Brent crude futures on London''s Intercontinental Exchange Futures rose $1.03 to $72.06 a barrel.

[R]8:00AM Oil prices climbed on a threat by Iran’s supreme leader.[/R]
Crude oil prices jumped Monday, reflecting a threat by Iran's supreme leader that his nation could put the world's oil supply in danger if the West punished Teheran over its nuclear program. Iran's Ayatollah Ali Khamenei addressed Western nations in a speech Sunday, saying: 'If you make any mistake [punish or attack Iran], definitely shipment of energy from this region will be seriously jeopardized.' Mr. Khamenei said the U.S. and its allies would be unable to secure oil shipments passing out of the Gulf through the strategic Strait of Hormuz to the Indian Ocean. On Monday OPEC President Edmund Daukoru encouraged the international community to work to solve geopolitical tensions sending oil prices up. Daukoru, who is also Nigeria's petroleum minister, said his main concern about high oil prices was that they would divert investment away from fossil fuels and into alternative sources of energy.

Light, sweet crude for July delivery rose $1.02 to $73.35 a barrel in mid-afternoon Asian electronic trading on the Nymex in Singapore. The contract rose Friday to $72.33 after eight foreign workers on a drilling rig off the coast of Nigeria were kidnapped and released Sunday. July Brent crude futures on London''s Intercontinental Exchange Futures rose $1.03 to $72.06 a barrel.


[R]7:30AM Japanese stocks finish lower, Singapore and Korea gain.[/R]
The Nikkei 225 closed at 15,668.31, down 0.77%, reversing about half of Friday''s advance. Video-game maker Nintendo fell 1.3% and optics and electronics company Nikon dropped 2.7%. Auto stocks plunged too, as Toyota shed 1.3% and Honda Motor fell 1.20%. In Hong Kong, the Hang Seng Index advanced 0.7% to 16,016.23. The Hang Seng China Enterprises Index of Hong Kong-listed mainland shares rose 1.5%. Shares in Cathay Pacific and companies connected with unlisted Dragonair were suspended from trading Monday morning after the Hong Kong Standard business newspaper said that Cathay Pacific almost finalized a deal to take over Dragonair. In Hong Kong afternoon trading, the Bank of China gained 2.16%, while local subsidiary BOC Hong Kong advanced 1.02% after an upgrade by Merrill Lynch. Elsewhere in the region, Korea''s Kospi index fell 0.6% and Singapore''s Straits Times Index was down 0.4%. Australia''s S&P/ASX 200 advanced 0.8%, while the Shanghai Composite rose 0.9% due to miners on both exchanges profiting from a rebound in metal prices.


[R]6:30AM Europe falls, struck by oil prices and weak dollar.[/R]
Stocks with the greatest exposure to the plunging dollar suffered the worst in early trade. Luxury goods makers, which are closely connected to the US export market, dropped – led by Luxottica, the Italian designer eyewear company, losing 2.4%. LVMH, the French maker of Louis Vuitton fashion accessories, shed 1.4%, while Christian Dior dropped 0.5%. Carmakers were also struck by advancing raw materials costs. Of the German groups, DaimlerChrysler dropped 1.4%, BMW fell 1.1% and Volkswagen shed 1.2%. French Renault declined 1%, and Peugeot lost 1%.

Light, sweet crude oil for July delivery advanced $1.02 to $73.35 a barrel and July Brent crude futures on London''s ICE Futures advanced $1.03 to $72.06 per barrel. In morning trading, the dollar fell against the euro. The European currency advanced to $1.2979 - the highest it has been since May 5 last year. It then pulled back slightly to $1.2957, up from $1.2917 late Friday in New York. The British pound advanced to $1.8856 from $1.8828 on Friday, while the dollar edged up slightly to buy 111.78 Japanese yen, from 111.62 in New York.