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Politics : Am i weird or are the rest crazy? -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (334)	3/28/2007 1:43:00 PM
From: stormrider1	Read Replies (1) \| Respond to of 3244

Oil at $90 a barrel? When crude prices spiked $5 on a rumor yesterday, observers began wondering how high they would go in the case of a real incident. By Elizabeth Strott A sudden spike in oil prices yesterday has traders wondering whether oil prices are about to start surging again. In just seven minutes late yesterday, oil futures jumped more than $5, or 8%, to $68.91 -- the highest level since September -- as an unfounded rumor of an attack on U.S. Navy warships by Iran circulated on the trading floors. Oil later fell back to close up 2 cents at $62.93, still its highest closing price for 2007. But the sharp reaction has observers wondering how high oil will go this time. "This Iranian situation will probably speed up the process," of oil price increases, said Phil Flynn, an oil trader at Alaron Trading. "One rumor late yesterday had this market rally $5 in five minutes -- that gives a taste of what could happen in the next few months. "I foresee a scenario where oil could shoot up $20 a barrel on such news," pushing the price of oil to between $80 and $90, Flynn said. Tensions continue Yesterday's rumor turned out to be just that, and the price of oil retreated. But tensions look unlikely to ease any time soon. "It is now time to ratchet up the pressure," British Prime Minister Tony Blair said in Parliament today. Blair said that efforts to free the 15 British sailors captured by Iran on Friday would enter a "different phase" if Iran did not release them. Iran's foreign minister said today the one woman in that group of captives would be released tomorrow or Friday. Adding to the nervousness, Iran said Monday that it was partly suspending cooperation with the United Nations' nuclear watchdog and that sanctions by the U.N. would not stop Iran from moving forward with its uranium enrichment program "even for a second." Another hostage crisis? Analysts found themselves using uncomfortably familiar language to refer to the current situation in Iran. "Every day that this hostage crisis continues … is another day with the potential for extreme action, military action," oil analyst Peter Beutel of Cameron Hanover said in his daily research note today. "The fact that Iran continues to enrich uranium against the U.N. Security Council's resolutions means that there are those in the U.S. and Britain who want to shoot first and ask questions later. Of course, that has the potential of pushing oil prices to numbers not previously seen." Summer driving season around the corner Even if the brewing Iran crisis is defused, Alaron's Flynn argued, oil prices are almost certainly headed higher. With the summer driving season approaching, "it's possible that we could see $78 per barrel this summer," Flynn said. "The fundamentals target this market in the mid-$70s without the Iranian situation." Earlier today, a weekly report from the Energy Department showed declines in supplies of distillate and gasoline stocks. Crude oil supplies fell by 900,000 barrels to 328.4 million last week. Oil traded as high as $78.40 a barrel last July. Conflict with Iran looming? But the situation in Iran could easily complicate things, said Fadel Gheit, oil analyst at Oppenheimer. Iran is a "tough nut to crack," Gheit said, adding that he believes the British are in for a long, painful stay. Concern that the U.S. is waiting for an opportunity to get involved is growing, Gheit added. "If we think the Iraq war was a mistake, this would be an apocalypse." my bold added Nearly one-quarter of the world's oil flows through the Gulf of Hormuz, which flows between Iran and Oman. Iran is the world's second-largest oil producer and exports more than 3 million barrels of oil a day. Iran also holds more than 10% of the world's confirmed oil supplies. And Gheit notes that growing tensions could spill over to affect the broader stock market. "Tension is high," Gheit said. The volatility in oil prices will continue to reflect tension in the region, and "worries could depress the stock market. "There is no question in my mind that if we have a military strikes against Iran, oil prices will rise," he added. "The question is by how much."