As Katrina batters the Gulf Coast, oil prices headed above $70 as traders factored in the short-term closure of refining facilities in the United States. As there is rising demand, and a bottleneck in refining infrastructure, the price of oil is still on an upward trend.
Agbeli Ameko, managing partner at First Enercast, said crude prices could push
toward US$75 a barrel Monday and said US$80 a barrel in the short term was
realistic.
Oil prices have been driving up to new record highs as
refineries struggle to cope with booming energy demand around the world.
Any problems with production anywhere have been sending prices up still
further.
The hurricane was expected to have a significant short- and
long-term impact on energy markets, impacting production offshore and onshore,
and shutting in refining and processing facilities.
This will lead to a further reduction in growth as inflation increases. Within six weeks, the effects of the hurricane on prices will be clear. We are now in the price range where Al -Qaeda or Iran could exact a huge risk premium if they close the Straits of Hormuz or attach refineries around the Middle East.