NEW YORK: Crude prices crossed $62 a barrel Friday to a three-month high, following the incident in the Middle East in which Iran captured 15 British Royal Navy personnel, triggering the prospect of increased tensions in the region.
U.S. crude gained 59 cents to reach $62.28 a barrel on the New York Mercantile Exchange, adding to the $2 gain registered on Thursday.
The price rise was also the result of reduced U.S. gasoline supplies just ahead of the summer demand. Gasoline future touched $2 a gallon Friday, which is the highest since 21 August 2006.
Brent crude oil for May settlement gained 67 cents to $63.18 a barrel on the London's ICE Futures exchange. This is the highest close since 20 December 2006.
Britain's ministry of defense said Iran had captured the naval personnel while they were on a "routine boarding operation" in Iraqi waters. The sailors, belonging to HMS Cornwall, had undertaken an inspection of a merchant ship and were returning to their ship in two boats, when they were surrounded by Iranian vessels and taken into Iranian territorial waters, the ministry said.
Britain has sought immediate release of these personnel.
Meanwhile, the Security Council is reviewing a revised draft of a U.N. resolution that will impose new sanctions on Iran over its nuclear intentions and its denial to stop enrichment of uranium. The possibility of these sanctions being approved by the U.N., which will enhance pressure on Iran, also caused the price spurt.
Oil traders are worried that the Iranian incident can cause a major confrontation between Iran and the West, following which Iran could cut off its oil supplies.
Global crude inventories have already declined following OPEC's implementation of an agreement to cut production by 1.7 million barrels a day.
