Oil spikes after rumour of Gulf action

Oil spikes after rumour of Gulf action
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: March 28 2007 10:06 | Last updated: March 28 2007 10:06


Oil prices were on high alert on Wednesday, with US crude spiking more than $5 in after-hours trade on rumours of hostilities in the northern Persian Gulf.

The initial spike – as high as $68.09 for Nymex crude – was caused by rumours that Iran had fired a missile at a US warship in the Persian Gulf. The US has built up a strong presence in the area, including 15 ships and more than 100 aircraft, since tensions between Iran and the west escalated over Iran’s nuclear ambitions.

The rumour was swiftly denied by the US, but crude prices in mid-morning London trade remained nearly 2 per cent higher than the previous session’s close, reminding investors of the fragile geopolitical situation in the Gulf.

Brent crude was $1 higher to $65.60 a barrel, while Nymex West Texas Intermediate was up $1.10 to $64.03 a barrel.

”Although the missile story turned out to be false, the Iranian abduction of British sailors is very real and has yet to play itself out,” said Edward Meir at Man Financial.

Markets have been increasingly nervous since 15 British sailors and marines were captured in Iranian waters more than week ago. Since March 20, Nymex crude has risen by nearly 13 per cent on fears the situation will not be solved diplomatically.

On Wednesday British foreign secretary Margaret Beckett cut short an official visit to Turkey to address parliament on the hostage situation.