Crude Oil Rises to Record on Turkey-Iraq Tensions, Nigeria

By Angela Macdonald-Smith


Oct. 29 (Bloomberg) -- Crude oil rose to a record $92.40 a barrel in New York after Turkey's Foreign Minister said his government is considering ``all options'' including military action to deal with Kurdish rebels operating from Iraq.

``Our patience has come to an end,'' Ali Babacan said yesterday in Tehran following talks with his Iranian counterpart Manouchehr Mottaki. In Nigeria, Italy's Eni SpA said armed men seized six of its workers in an attack on a supply ship, heightening concerns about potential supply disruptions.

``There are still negotiations involving Turkey, the U.S. and Iraq,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``There are also reports of the seizure of a number of oil workers in Nigeria. At a time when everything is going right for the oil price this can only add fuel to the fire.''

Crude oil for December delivery rose as much as 54 cents, or 0.6 percent, to an all-time high in after-hours electronic trading on the New York Mercantile Exchange. The contract was at $92.35 at 6:53 a.m. Singapore time.

On Oct. 26 the contract gained $1.40, or 1.6 percent, to settle at a record $91.86 a barrel after reaching $92.22 earlier in the session, the previous record high. The December contract rose 5.6 percent last week. Oil is up 58 percent from a year ago.

Turkey can use different tools for fighting the Kurdistan Workers' Party, or PKK, including diplomacy, economic and military means as a last resort, Babacan told reporters. ``All options are on the table.''

Attack Threat

Turkish Prime Minister Recep Tayyip Erdogan warned Oct. 27 that his country may order wider military attacks against the group's camps if needed, according to Turkish media. Turkey said it bombed PKK units in northern Iraq last week and sent troops across the border in pursuit of the militants.

Tensions over Iran, holder of the world's second-biggest oil reserves, are helping drive record oil prices, Moore said. On Oct. 26 the U.S. accused Iran's military of supporting terrorism and announced new sanctions on the country. The U.S. wants Iran to halt uranium enrichment that is suspects is a cover for developing nuclear weapons.

Iran is still ``at least a few years away'' from being able to build a nuclear bomb, and there is time for diplomacy to head off a military confrontation, the head of the United Nations nuclear watchdog agency said yesterday.

International Atomic Energy Agency chief Mohamed ElBaradei said on CNN's ``Late Edition'' program he hasn't seen ``any concrete evidence'' of a secret Iranian weapons program.

Brent crude oil for December settlement on Oct. 26 rose $1.21, or 1.4 percent, to a record $88.69 a barrel on the London- based ICE Futures Europe exchange. Brent reached $89.30 during the session, the highest since trading began in 1988.