17 July 2008 | Jake Kanter
Political tension in the Middle East helped force the price of oil to new record highs and "exacerbated" speculation, a review has revealed.
The Organisation of the Petroleum Exporting Countries' (Opec) Monthly Oil Market Report, said the price for a barrel of oil in June reached a record average high of $128.34 (£64) - $8.94 (£4.46) more than in May. At the start of July, the barrel price rose another $10.13 (£5), and averaged at $137.57 (£68.67) for the month so far. The Opec crude oil basket price is currently $133.09 (£66.43).
Conflict in the Middle East raised concerns over a shortfall in supply and contributed to the price rises. John Westwood, chairman of analysts Douglas-Westwood, agreed: "Politicians do silly things. War in the Middle East is a good example, if we didn't have these things there would be more oil." Prices were also inflated by fluctuations in the value of the dollar and the threat of a storm in the Gulf of Mexico.
Speculation was heightened by an "escalation" in tension between Israel and Iran, which pushed up oil futures prices to a record average high of $138.54 (£69.15) a barrel, in the first two weeks of July. Last week, Opec's secretary general Abdalla Salem El-Badri said speculators have "hijacked" the oil market and played a major role in this year's run of record prices (News, 17 July).