LONDON, 28 August 2004 — World oil prices held steady yesterday on concerns over the possibility of further unrest in major producer Iraq despite a ceasefire in its holy city of Najaf, where fighting has raged for weeks, traders said. The price of London’s benchmark Brent North Sea crude oil for delivery in October climbed seven cents to $40.40 per barrel in late deals.
New York’s main contract, light sweet crude for October delivery, eased five cents to 43.05 dollars per barrel in early deals.
Prices remain far short of the all-time high of $49.40 reached in New York trading a week ago. “The halt to fighting in Najaf is a key factor” behind steadier prices, Societe Generale analyst Frederic Lasserre said.
But traders voiced concern that unrest could easily return to Iraq.
“Peace is supposed to be achieved (in Iraq with the ceasefire) and that could be an end to this uprising but with the Iraq situation, who knows what can happen next? There could be another problem with the pipelines,” GNI-Man Financial trader Kevin Blemkin said.
“People are concerned and are not prepared to go short (or sell their oil) into the weekend,” Blemkin added.
“We doubt that the risks surrounding Iraqi oil exports have cleared yet,” Barclays Capital analyst Kevin Norrish said yesterday.
“The usual industry shock absorbers of spare capacity and inventory levels look thin and there is still the risk of a supply crunch as we approach the northern hemisphere winter,” he added.