Friday, November 9, 2007

What is driving oil prices so high?

'What factors are causing this unremitting increase and what are the likely consequences for consumers and the global economy?'

Το bbc κάτι θα ξέρει: (?!?)

'What is causing the latest price spike?

This was triggered by simmering tensions between Turkey and Kurdish separatists in northern Iraq and fears of possible incursions by Turkish troops into Iraq.

Prices have remained above $70 a barrel for most of the year

The amount of oil produced in northern Iraq is actually very small while the major pipeline linking the Iraqi town of Kirkuk, just south of the Kurdish region, with Turkey has been shut for long periods since the 2003 invasion of Iraq.

But it is fears that the dispute may escalate and threaten oil output in the wider region - Iraq, Iran, Kuwait and Saudi Arabia between them account for 20% of global supplies - which have fanned the price rises.

In particular, there are concerns about potential Kurdish reprisals on an important pipeline in Turkey, which delivers 700,000 barrels a day from Azerbaijan to the port of Ceyhan.

The situation in northern Iraq is just one of a number of geopolitical factors which are causing uncertainty in the market and helping to push prices up.

Iran's push to acquire nuclear power and, many believe, nuclear weapons has sparked concerns it could use its own oil supplies as a bargaining chip in any future showdown.

Barely-veiled threats from the US, suggesting that military action remains a live option, have further accentuated fears.

Militant violence in Nigeria's largest oil-producing region and recent violence in Afghanistan and the Yemen has also served to inflate prices.

The weak dollar, which makes it cheaper for importers to buy dollar-denominated oil supplies, is also a major factor...'



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