Fuel price under pressure again
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MOTORISTS could face more pain at the petrol pump after crude oil prices flared overnight.
In London, Brent futures hit a record high of $US78.64 after a pipeline spill forced BP to start closing production from America's biggest oil field.
The incident in Alaska came as prices were already on the boil because of supply concerns in major producing countries Iran and Nigeria, violence in the Middle East and strong global demand.
In London, the price of Brent North Sea crude for September delivery shot up to its new peak at 3.05am (AEST). About an hour later, it was trading at $US78.32 a barrel, up $US2.15 from Saturday's settlement.
New York's main contract, light sweet crude for delivery in September, was up $US2.24 at $US77.00.
Both world markets have been surging since mid-July, when violence erupted between Israel and the Shiite militia Hezbollah in Lebanon.
British energy giant BP said overnight it had started shutting down the Prudhoe Bay oil field in Alaska after discovering severe corrosion on a pipeline and a small spill.
The US Department of Energy (DoE) said it would be receptive to any requests from refiners to tap into the nation's emergency oil reserve, amid fears the incident could cut daily US oil output by as much as 8 per cent.
Alaron Trading analyst Phil Flynn said: "I am beginning to think BP stands for big problems. Better hang on to your hat, as a BP pipeline leak in Alaska could spell big problems for the world oil market."
The shutdown in Alaska will slash BP's US production by 400,000 barrels per day (bpd), no mean amount at a time of global tensions and tight supplies.
Barclays Capital analyst Kevin Norrish said: "The reason for the move up in price is ... announcement by BP that it is shutting down part of its Prudhoe Bay field in Alaska, the largest in the US,"
"Tensions surrounding the Middle East situation have also worsened over the weekend."
Prudhoe Bay accounts for about half of Alaska's total output and around eight per cent of total production in the United States, according to the DoE.
Analysts said the shutdown came at a bad time for the oil market, with prices already being pushed higher by the Israeli offensive against Hezbollah militants and threats to Nigeria's oil industry.
The nuclear energy crisis in Iran, the world's fourth-biggest crude producer, was adding further upward pressure to prices.
Agence France-Presse
