Oil prices to rise amid Iran concerns

Oil prices in the international markets are likely to go up over both the short and medium term, and may even double by 2025, according to analysts.

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By  Tamara Walid Published  April 16, 2006

Oil prices in the international markets are likely to go up over both the short and medium term, and may even double by 2025, according to analysts. Doha-based Mohamed Al Shirawi, general coordinator at Industries Qatar, predicted that the prices of crude in the global markets would continue to rise due to increasing demand from countries such as China and India. Demand for natural gas is expected to grow by 2.3% annually until 2025. The world’s gas consumption currently lies at 92 trillion cubic feet (tcf), and this figure is projected to grow to 128 tcf by 2015, then to 156 tcf by 2025. Al Shirawi said that higher oil prices in the international markets had led to increased liquidity in the GCC region, which was in turn responsible for the region’s booming economy. However, the higher crude prices have also led to rampant inflation in the Gulf, as economic growth has soared. As Al Shirawi made his predictions, oil prices in the UK climbed to a record high, amid reports that the US is considering persuing military options against Iran. Last week, UK benchmark Brent crude hit a peak of US$68.93, before settling US$1.57 higher at US$68.93. Simultaneously, US sweet light crude rose U$1.36 to close at U$68.75. Crude oil prices have risen 11% so far this year, and are not far below the historic high of US$70.85 reached last August, as Hurricane Katrina shattered oil facilities on the US Gulf coast. In the UK, prices have now exceeded the previous record peak of US$68.89, reached during 2005’s storms. Brokers admitted that they might test the US$70 level, though stressed that only a significant supply disruption would push the price above this key barrier. EU foreign ministers have discussed possible measures against Iran, including sanctions, amid signs of a further rise in concerns over the oil-rich nation’s nuclear plans. Whilst Washington has denied media reports that it is preparing for a military strike on Iranian nuclear facilities, some fear that the US is determined to target Tehran. Iran claims that it needs nuclear power in order to generate electricity, however both the US and EU are convinced it is attempting to develop an atomic bomb. Continuing instability in oil-producing regions of Nigeria has also helped to boost crude oil prices. Production totalling 500,000 barrels a day has been lost since February, as a result of a series of attacks on oil facilities by rebel groups.

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