NEW YORK - Crude oil futures flirted with new record highs on global markets Tuesday after comments by US President George W. Bush on the Middle East deemed aggressive by traders.
On the New York Mercantile Exchange, the April contract soared as high as 55.15 dollars a barrel after the Bush remarks. The closing price was 54.59 dollars, a barrel, up 70 cents from the prior day and the highest close since last October.
Brent North Sea crude soared to an intraday record 53.30 dollars in London, then settled back at 52.84, a jump of 75 cents.
Bush warned Syria on Tuesday to leave Lebanon before the May parliamentary elections there, hailing a "thaw" he said was melting authoritarian rule throughout the Middle East.
The US leader had other words of warning for Damascus and Tehran, linking a recent suicide bombing in Tel Aviv to extremists based in Syria.
Traders reacted with concern for the outlook in the Middle East.
Donald Luke at Fimat USA said the tone of the Bush speech "sounds like threathening remarks" that could result in more instability.
"If we go into Lebanon, it would be supportive to the price of oil, but I don't think it's a possibility right now."
Bush warned Syria on Tuesday to leave Lebanon before the May parliamentary elections there, hailing a "thaw" he said was melting authoritarian rule throughout the Middle East.
The US leader had other words of warning for Damascus and Tehran, linking a recent suicide bombing in Tel Aviv to extremists based in Syria.
"We had some comments from George Bush that were fairly aggressive towards some of the Middle East nations including Syria and Iran," said Bache Financial trader Tony Machacek.
"This again reiterated concerns about the instability of the Middle East."
"The market is very sensitive to any comment that George Bush makes because we are not really quite sure what his next move might be," Machacek said.
Iran -- the second biggest oil producer in the Organization of Petroleum Exporting Countries -- produces approximately 3.7 million barrels per day and has reserves of almost 100 billion barrels.
OPEC is to meet to discuss production next week in Isfahan, south of Teheran.
Syria was considered a much smaller oil producer, providing less than 500,000 barrels per day, but its proximity with Iraq worried investors.
Another factor behind surging oil prices was Royal Dutch/Shell's decision to shut down its platform in the Draugen oilfield, Norway's main producing field, owing to a leak of condensate, a very light type of oil.
Royal Dutch/Shell operates the only platform in the Draugen field, which produces 120,000 barrels per day.
It could take days to get production going again, according to a company spokesman.
Finally, traders geared up for the latest weekly snapshot of US inventory data, to be published Wednesday.
Oil prices have now more than doubled since early 2002.
Adjusted for inflation, however, they remain far below levels reached in the wake of the 1979 Iranian revolution when prices surged to upwards of 80 dollars a barrel in today's money.
Phil Flynn, analyst at Alaron Trading, said the weak dollar is also a factor in the recent runup because "it's giving OPEC the excuse they need not to increase production ... They can blame the dollar for the rise and not shortages in production."
03/08/2005 20:42 GMT