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Oil hits record highs as saudi king dies Original Source Link: (May no longer be active)
http://reuters.myway.com/article/20050801/2005-08-01T210012Z_01_L01130538_RTRIDST_0_NEWS-MARKETS-OIL-DC.htmlhttp://reuters.myway.com/article/20050801/2005-08-01T210012Z_01_L01130538_RTRIDST_0_NEWS-MARKETS-OIL-DC.html
Oil hits record as Saudi king dies
Aug 1, 5:00 PM (ET)
By Timothy Gardner
NEW YORK (Reuters) - Oil prices shot to a record above $62 a barrel on Monday as the death of Saudi Arabia's King Fahd, U.S. refinery outages and tensions over Iran's nuclear ambitions rattled the market.
U.S. light, sweet crude rose $1.73 to a record $62.30 a barrel before settling up $1, or 1.7 percent, at $61.57 on the New York Mercantile Exchange. The previous record, hit July 7, was $62.10. When adjusted for inflation, oil briefly traded near $90 a barrel in the early 1980s. In London, Brent crude rose $1.07 to $60.44 on the International Petroleum Exchange.
Oil has climbed about 40 percent this year, with the Organization of Petroleum Exporting Countries struggling to meet demand by producing at 25-year highs.
"Refining problems contribute to the prices as well, but the big story is people are looking at King Fahd's death," said Rick Mueller, a crude expert at Energy Security Analysis Inc. in Massachusetts.
"For the first time people are thinking about life after Abdullah. The succession there is not as clear," he said.
Crown Prince Abdullah, who is Fahd's half brother and has been Saudi Arabia's de facto leader since Fahd suffered a stroke in 1995, was swiftly pronounced monarch of the world's largest oil exporter after Fahd died on Monday.
Abdullah is an octogenarian, as was Fahd.
He will adhere to Saudi Arabia's long-standing oil policy aimed at ensuring global markets are well supplied, the kingdom's next U.S. ambassador, Prince Turki al-Faisal, said.
But analysts said markets were jittery over the longer term Saudi policy.
"It's this succession struggle and the possible related instability that's the actual concern," one trader said.
REFINERIES UNDER STRAIN
A spate of refinery problems in the United States resurrected concerns about meeting strong fuel demand.
Exxon Mobil added to the anxiety over the weekend as it shut down its 235,000-barrel-per-day refinery in Joliet, Illinois, according to trade sources. BP also shut down a gasoline-producing unit over the weekend at its giant Texas City refinery -- the third-largest in the United States and the source of 3 percent of its gasoline -- for maintenance, a regulatory filing showed.
That came after a fire late last week slowed operations at the plant, where an explosion killed 15 in March.
"Steadily declining inventory levels ahead of the gasoline peak demand season mean that this market has been looking increasingly tight," Barclays Capital said in a report.
Although stockpiles of most fuels are relatively healthy for this time of year, traders fear refiners may be hard pressed to satisfy rising summer motor fuel consumption while also stocking up enough distillate supplies to meet peak winter consumption.
IRAN TENSIONS
Adding to market nerves, Iran, OPEC's second biggest oil producer, said it restarted a nuclear facility that the West suspects could help it build a nuclear bomb.
The move was in defiance of European Union warnings and could lead to Iran's case being sent to the United Nations Security Council for possible sanctions.
(Additional reporting by Simon Webb, Barbara Lewis, Peg Mackey and Janet McBride in London, Jonathan Leff in Singapore)
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