LONDON, 14 April 2006 — The price of Brent North Sea crude oil broke through $70.00 per barrel for the first time yesterday, fueled by heightened tensions between Iran and the international community. The price of Brent crude for June delivery jumped 34 cents to reach $70.20 per barrel at 16:45 GMT. It later stood at $70.18, an increase of 32 cents from Wednesday’s close.

“It’s another milestone,” said Barclays Capital analyst Kevin Norrish, who added that “Brent is leading the way at the moment.” New York’s main contract, light sweet crude for delivery in May, was trading up 33 cents at $68.95 after reaching an intra-day peak of $69.00. But adjusted for inflation, prices remain below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of $80.0 a barrel in today’s money.

London’s Brent contract has been striking record high points since Monday on market concerns that the United States might launch military strikes at uranium facilities in Iran, the world’s fourth largest producer of crude.

Iran repeated yesterday after talks with the head of the UN atomic watchdog, Mohamed El-Baradei, that it would not bow to demands it freeze uranium enrichment.

Norrish added: “The general picture is that the tightening (gasoline) market and geo-political risks are underpinning further increases in crude oil, despite the very high crude inventory levels.” The new Brent record beat the previous all-time peak, set on Wednesday, when the contract reached $69.97 on news of falling US gasoline stockpiles.

In turn, that beat the previous record $68.89 reached on Aug. 30, 2005, when Hurricane Katrina battered oil facilities in the US Gulf Coast. The same day New York crude reached a record $70.85 per barrel.

The International Monetary Fund yesterday warned high oil prices are storing up trouble for the world economy by creating serious imbalances in national finances, not least in the United States. The IMF said much of the cash bonanza enjoyed by oil-exporting countries was being recycled into US markets, driving up the US current account deficit still further with resulting risks for all.

It said “the recycling of petrodollars through international capital markets is helping to keep interest rates low in the United States, thereby further fuelling the current account deficit by supporting consumption.” But the higher the US deficit goes, the greater the risk of the dollar crashing, “which would push US interest rates up sharply and possibly lead to a recession,” the IMF warned.

The Fund’s comments came in a prereleased chapter of its semi-annual World Economic Outlook, the rest of which comes out next Wednesday. It said that higher oil prices accounted directly for about half of the deterioration in the US current account over the past two years. The US current account deficit widened to a colossal new high of $804.9 billion in 2005, reflecting high energy prices and a consumer binge on cheap imported goods.

In the fourth quarter of 2005, the deficit surged by 21.3 percent from the previous three months to a record $224.9 billion. That amounted to an unprecedented 7.0 percent of gross domestic product (GDP). In the past, global imbalances from high oil prices have adjusted quickly as growth in energy importers such as the United States slows and inflation rises.

But this time, interest rates have stayed lower thanks to the benefits of globalization and greater vigilance against inflation, while oil exporters are not spending their cash as freely as in the past.