World oil prices firmed after hitting a record high in New York the previous day owing to global tensions over North Korea and Iran, and concerns over US motor fuel data.

New York’s main contract, light sweet crude, for delivery in August, hit a historic 75.40 dollars per barrel on Wednesday after news that North Korea had launched up to seven missile tests.

That exceeded the previous intra-day peak of 75.35 dollars, set on April 21 amid simmering concerns over Iran. The contract also struck a historic close on Wednesday of 75.19 dollars.

See full article here.  My favorite analysts continue to be bullish on oil, for the following reasons:

  • North Korea’s missile tests and delay of Iran nuke talks with EU and overall geopolitical tensions from Iran, Iraq, and Nigeria;
  • Seasonal demand increases – driving season, firm product market;
  • Potential supply risk due to hurricanes;
  • Growth in Oil demand in US and China expected to be greater in 2006 than 2005;
  • Nigerian crude production still down 500MBPD;
  • Oil producing capacity no greater than last year; and
  • Weakness of the U.S. Dollar.

Add to that the fact that the oil commodity markets have become the playground of nearly $100 billion in institutional and retail investors’ speculatin’ cash, and I think we could be talking about yet higher prices for at least the short term.

Meanwhile, the situation in Iran is getting touchy. Bloomberg is reporting that Iran may run out of gasoline by the end of August — its $2.5 billion budget for subsidized gasoline imports has been ravaged by spiraling oil costs.  I’m now seeing this as “ironic” rather than  “by Iran’s design.”   A nation with phenomenal oil reserves is running out of gasoline due to the high cost of oil — caused in part by its defiance against the international community over its nuclear development plans.

How many violent conflicts have been touched off by ironic circumstances rather than nefarious design?  That’s an unanswerable question.