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Oil surge matches record levels Oil prices pull back from highs
(about 11 hours later)
Oil prices have matched record highs - spurred by supply concerns and tensions between Turkey and Kurdish rebels in northern Iraq. Oil prices have pulled back from record highs after a minister for producers' cartel Opec said the group may now consider boosting output.
US light, sweet crude was trading at $87.99 a barrel having touched $88.20 - equalling Tuesday's record - while Brent crude was up 24 cents to $83.79. Following the comments by Nigeria's oil minister Odein Ajumogobia, US light crude fell 27 cents to $87.34, while Brent pulled back 51 cents to $83.04.
The price surge followed reports that Turkish forces had shelled an Iraqi border village in recent days. Earlier on Wednesday, US light had touched as high as $89, while Brent crude had hit $83.80.
With global supplies tight, any threat to oil output is likely to hit prices. Oil prices had risen due to tensions between Turkey and Kurdish rebels.
Economic impact Mr Ajumogobia said Opec leaders could now meet as early as 17 November, three weeks ahead of their next planned meeting.
The Turkish government is set to give the army permission for a military incursion into northern Iraq after 13 Turkish soldiers were killed close to the Iraqi border. "We are still a month away and it depends what transpires before then," he added.
Oil prices are likely to remain high in the absence of a further change in OPEC quota policies or a major global slowdown IMF class="" href="/1/hi/business/7048600.stm">Q&A: What's driving oil prices? A report showing higher than expected US crude reserves also helped take the heat off oil prices.
Turkish deaths
The Turkish parliament has now authorised the use of force against Kurdish militants in northern Iraq, a move which could threaten oil supplies from the region.
Turkey's movement towards a military incursion into northern Iraq follows after 13 Turkish soldiers were killed earlier this month close to the Iraqi border.
Ankara estimates that 3,500 Kurdistan Workers' Party (KWP) rebels - who want to see the establishment of an independent Kurdish homeland - are based across the border in Iraq.Ankara estimates that 3,500 Kurdistan Workers' Party (KWP) rebels - who want to see the establishment of an independent Kurdish homeland - are based across the border in Iraq.
The market has not been as worried over a geopolitical issue since last July when Israel and Hezbollah guerrillas battled in Lebanon, said Steve Rowles, an analyst with CFC Seymour in Hong Kong. The market has not been as worried over a geopolitical issue since last July, when Israel and Hezbollah guerrillas battled in Lebanon, said Steve Rowles, an analyst with CFC Seymour in Hong Kong.
He predicted that "overall the tensions will eventually subside," saying that Iraq "isn't the oil producer that it once was". He predicted that "overall the tensions will eventually subside", saying that Iraq "isn't the oil producer that it once was".
Oil prices have quadrupled since 2002 because of strong demand from fast-growing economies such as China and India, allied to instability in oil-producing nations in the Middle East and Africa.Oil prices have quadrupled since 2002 because of strong demand from fast-growing economies such as China and India, allied to instability in oil-producing nations in the Middle East and Africa.
The cost of oil is still below the inflation-adjusted level of about $90 a barrel seen in 1980 when spiralling prices helped contribute to a recession in the US. The cost of oil is still below the inflation-adjusted level of about $90 a barrel seen in 1980, when spiralling prices helped contribute to a recession in the US.
Opec output Last month, Opec said that it would be boosting its production by 500,000 barrels per day from the beginning of next month, to cope with resilient global demand for oil.
Analysts are divided over where prices will head next, although most believe the upward pressure on prices - which is also being driven by concern about the availability of supplies - is set to continue.
Further pressure on supplies came with news that oil producers outside the Opec cartel were to reduce output by about 110,000 a day.
Last month, Opec said that it would be boosting its production by 500,000 barrels per day from the beginning of next month to cope with resilient global demand for oil.
However, it has since added that demand for oil this winter in the US - the world's largest consumer of heating oil - will be stronger than previously thought.
"Oil prices are likely to remain high in the absence of a further change in Opec quota policies or a major global slowdown," the International Monetary Fund said.