The cost of oil surged to a new record near $144 a barrel yesterday as oil company bosses gathered in Madrid to discuss rocketing prices.
The cost soared following tensions in Iran as investors also sought refuge from a weaker dollar.
US light crude for August delivery hit $143.67 a barrel in trading on the New York Mercantile Exchange, before slipping back to settle 21 cents lower at $140. London Brent crude settled 48 cents lower at $139.83.
Heads of oil majors such as BP and Shell met to address the World Petroleum Congress in Madrid. Its opening session struck a sombre tone as oil’s record run continued, with speakers agreeing that prices were unlikely to return to 2005 levels.
The chief executives of Royal Dutch Shell and Spain’s Repsol said market fundamentals and tight supplies, not speculators, were the reason oil had hit record prices.
Shell chief executive Jeroen van der Veer said worries that supply would not meet demand were driving the price, although he acknowledged some investors were also betting on the trend.
BP chief executive Tony Hayward warned against hopes that the present high prices are a bubble that will burst as they did in the 1970s, saying that supply and demand had since changed.
Concerns over global supplies and tension between Iran and Israel have pushed prices higher in recent days.
Oil traders reacted yesterday to reported warnings from the commander of Iran’s Revolutionary Guards that Tehran would attack Israel with missiles if his country was attacked.
Reports also suggested that if Iran were provoked, it would move to control a key oil passageway in the Gulf.
A meeting in Saudi earlier this month failed to ease the current price surge, despite the Kingdom pledging to add another 200,000 barrels per day next month to output.