NEW YORK — Oil prices surged to a record of over $140 a barrel on Thursday after Libya said it was studying options to cut output in response to possible US actions against producer countries.
US crude was up $5.50 at $140.05 a barrel at 2:22 p.m. EDT (1822 GMT), passing the record of $139.89 reached on June 16. London Brent crude was up $5.33 at $139.66.
"The crude oil market spiked sharply higher in early trading after Libyan National Oil Company chief Shokri Ghanem said that Libya was considering a production cut," said Tim Evans of Citi Futures Perspective.
Ghanem, Libya's most senior oil official, said he was studying the possibility of reducing production in response to a bill before the US Congress that would empower the Justice Department to sue members of the Organization of Petroleum Exporting Countries for limiting oil supplies.
"We are studying all the options," Ghanem told Reuters. "There are threats from the Congress and they are taking OPEC to court, extending the jurisdiction of the US outside the US"
President George W. Bush has said he will veto the legislation if it is passed by Congress. The House of Representatives passed the bill in May, but the Senate has yet to schedule a vote on the measure.
Oil prices have rallied over the past six years, supported by surging demand from emerging economies like China and India.
Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have added to gains this year.
The dollar fell broadly on Thursday after the Federal Reserve held interest rates steady on Wednesday and dashed expectations of an imminent rate hike.
Rising fuel costs have strained economies and spurred protests around the globe, prompting OPEC kingpin Saudi Arabia to pledge to hike output during a meeting between producer and consumer nations over the weekend.
OPEC president Chakib Khelil said in an interview Thursday that prices could reach $170 a barrel in the coming months, and he reiterated the cartel's position that speculation—not a supply problem—was driving oil to new highs.
"I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," Khelil told France 24 television, according to a text of the interview released by the station.
"I think that the devaluation of the dollar against the euro, if everything goes as I think it will, will be of the order of perhaps 1 to 2 percent, and this will probably generate an $8 rise in the price of oil," he said.
Oil prices fell on Wednesday after US government data showed a surprise build in the crude inventories of the world's top consumer as demand continued to drop.
A Nigerian oil workers union and Chevron were expected to resume talks on Thursday in a last-ditch effort to avert an all-out strike that could sharply cut output from the OPEC nation.
Separately, pipeline attacks cut Chevron's Nigerian output of around 350,000 barrels per day by one-third last week. With editing by INQUIRER.net
