LONDON, AP -Oil prices dropped Monday after the Saudi oil minister said OPEC wanted to avoid an economically disruptive increase in oil prices and as U.S. Secretary of State Condoleezza Rice traveled to the Mideast to try to find a diplomatic solution to the violence in Lebanon and Israel.
Light, sweet crude for September delivery on the New York Mercantile Exchange fell 58 cents to $73.85 a barrel in electronic trading by midday in Europe.
September Brent on London’s ICE Futures exchange fell 63 cents to $73.12 per barrel.
On Sunday, Saudi Arabian Oil Minister Ali Naimi said the Organization of Petroleum Exporting Countries wanted to avoid “raising prices in a way that might affect the global economy.”
“OPEC is concerned about the stability in the international market,” he said after meeting his Nigerian counterpart Edmund Daukoru, who is also president of OPEC.
Natural gas futures rose 3 cents to $6.170 while heating oil futures fell more than 2 cents to $1.9349 a gallon. Gasoline futures dropped more than half a cent to $2.2826.
The sudden eruption of fighting between Israel and Hezbollah militants in Lebanon on July 12 lifted crude futures to a record $78.40 a barrel two days later on fears that the fighting would escalate into a regional war and disrupt supplies, particularly from Iran, OPEC’s No. 2 supplier and a backer of Hezbollah.
Rice made a surprise visit to Lebanon on Monday while en route to Israel to launch diplomatic efforts aimed at ending 13 days of warfare as Israeli ground forces pushed deeper into the country in heavy fighting with Hezbollah guerrillas.
Rice arrived in Beirut in the afternoon and was to meet with Prime Minister Fuad Saniora in the previously unannounced stopover before she heads to Israel, Saniora’s office said.
Rice plans meetings in Jerusalem and the West Bank with Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas. In addition, she will go to Rome for sessions with representatives of European and moderate Arab governments that are meant to shore up the weak democratic government in Lebanon.
On Sunday, Lebanese Hezbollah guerrillas launched more than a dozen rockets against the Israel’s third-largest city, Haifa, killing two people. Israeli missiles struck a convoy of fleeing Lebanese, killing four people, including a journalist.
While oil prices have receded from recent highs after data showed that U.S. petroleum inventories grew across the board last week, worries about the Middle East crisis linger, although the market seems relieved that the conflict is not spreading.
Comments last week by U.S. Federal Reserve Chairman Ben Bernanke also served as a moderating influence on the market. Bernanke said “the increase in energy prices is clearly making the economy worse off both in terms of real activity and in terms of inflation.”
If oil prices were to rise another $10 or $15 a barrel, there would be “significant consequences” for the U.S. economy, he added. He said high energy prices are already hurting the economy, “in terms of real activity and in terms of inflation.”