Oil reaches 100 dollars a barrel: new record

Jan 3, 2008, 1:37 GMT

An undated file picture shows a fire tower at an Iraqi refinery. The oil price has passed 100 dollars a barrel on world markets for the first time ever on 02 January 2008, raising fears of new petrol price hikes. The price of U.S. crude has gained over four dollars to breach the 100-dollar level, while Brent crude which is bought by South Africa has risen by 3 dollars-60 to 97 dollars 48. EPA/ALI HAIDER

New York -  The price of crude oil reached the record mark of 100 dollars a barrel on Wednesday, riding a wave crest of global fuel demand.

The price for a barrel - 159 litres - for delivery in February reached exactly 100 dollars Wednesday afternoon on the New York commodities market.

The price gain, following the 57 per cent increase in 2007, was boosted by expectations that US stockpiles had dropped to a three- year low last week, by the weakness of the US dollar and by unrest in Nigeria, Africa's largest oil supplier.

'This is the culmination of everything that we talked about last year,' John Kilduff, vice president of risk management at MF Global Ltd. in New York, was quoted as saying by Bloomberg financial news service. 'Various geopolitical problems have deteriorated overnight, in particular Nigeria and Pakistan. Commodities, and in particular oil, have become safe havens in a dangerous world.'

China has more than doubled oil demand since November 2001, when crude oil prices had dropped to 16.70 dollars a barrel. Supplies have been cut from Nigeria, Iraq and Venezuela.

The 100-dollar price was the highest since 1981, when prices rose to 84.73 inflation-adjusted dollars. Those high prices sparked a drive for efficiency which lowered prices until rising economic affluence in China, India and elsewhere in the developing world started to again push up prices.

Asia's developing economies are expected to grow 9.8 per cent in 2008, the International Monetary Fund has said.

The dollar's 11-per-cent slide in 2007 against the euro has also boosted prices because it made commodities cheaper for buyers outside the US.

In Nigeria, Royal Dutch Shell has shut down 500,000 barrels of its daily output - about one-quarter of Nigeria's total - due to attacks and kidnappings by militants on foreign installations and workforce.