SINGAPORE (AFP) – Oil prices eased from record highs in Asia on Monday even as tensions escalated further along the Turkish border with Iraq.
New York’s key oil futures contract, light sweet crude for delivery in November, was 60 cents lower at 88.00 dollars a barrel in afternoon trade.
Analysts cited profit-taking as the contract closed down 87 cents at 88.60 dollars in New York on Friday, after hitting a record 90.07 dollars earlier.
Brent North Sea crude for December delivery dropped 38 cents to 83.41 dollars per barrel. The contract hit a record 84.88 on Thursday.
Surging crude prices blazed a record-breaking trail last week as Turkey set the stage for a possible military incursion into oil-producing northern Iraq.
But David Johnson, an analyst with Macquarie in Hong Kong, said fears over the impact of the tensions on oil prices may have been overblown.
“We’re talking about one pipeline that carries about 600,000 barrels a day, under threat,” Johnson said. “There was nothing else really under threat.”
Turkey said Sunday it was ready to pay any price to win victory over Kurdish separatists after 12 soldiers and 32 rebels were killed in heavy clashes near the border with Iraq.
Turkish Defence Minister Vecdi Gonul however said after talks with US Defence Secretary Robert Gates that Ankara did not have urgent plans to cross the border.
Turkey accuses the rebels of launching assaults from Iraqi territory.
A falling US dollar has helped support the record-high prices. A weak greenback makes commodities priced in the US unit cheaper for buyers using stronger currencies and therefore boosts demand for crude, analysts say.
The dollar suffered fresh losses Monday, falling to a record low 1.4347 dollars against the euro before easing back to 1.4323 by mid-afternoon trade in Tokyo.
Analysts have also expressed concern about tight fuel supplies going into the Northern hemisphere winter.
Iran said Saturday that the real price of oil is actually less than 50 dollars a barrel.
“Oil is still cheap,” Iran’s acting Oil Minister Gholam Hossein Nozari said in an interview at the weekend. His country is the number-two exporter in the Organisation of Petroleum Exporting Countries (OPEC) cartel.
Nozari argued that calculations based on current inflation rates and depreciation of the dollar’s value, as well as high costs of oil and gas projects, puts oil’s true price at less than 50 dollars a barrel.