LONDON, June 8: World oil prices fell under $70 per barrel on Thursday following news of the death of Al-Qaeda’s chief in Iraq, analysts said.
New York’s main contract, light sweet crude for delivery in July, sank by 41.32 to $69.50 per barrel in pit trading.
At around 16:15 GMT, the contract touched $69.10 — the lowest level since May 22.
In London, Brent North Sea crude for July delivery dropped $1.02 to $68.17 per barrel in electronic deals. In afternoon trade it fell to $67.73 — last seen on May 22.
Senior Al-Qaeda leader Abu Musab al-Zarqawi, who had orchestrated a bloody campaign of attacks and beheadings in Iraq, was killed on Wednesday in an air strike on a safe house north of Baghdad, US and Iraqi officials said, hailing a major blow against the network.
“On the geopolitical front, the news that the Al Qaeda’s political leader in Iraq, Abu Musab al-Zarqawi, was killed has added to the easing of concerns over Iran,” said Barclays Capital analyst Kevin Norrish.
“This comes after a relatively positive reception early this week for a package of incentives aimed at encouraging the country to curb its nuclear programme.”
Added to the picture was the report that five South Koreans taken hostage by Nigerian militants were freed on Thursday.
Crude futures had already slumped on Wednesday after US energy reserves rose across the board last week, coupled with positive developments in the Iranian nuclear crisis, dealers said.
Regarding Iraq, Investec analyst Bruce Evers remained cautious in his outlook.
“There is a view that now that Zarqawi has been killed, the situation in Iraq will become more stable. But it is a very dangerous thing to assume.”
Owing to persistent violence and sabotage to its energy facilities, Iraq struggles to produce two mbpd, which is below the level of output before the US-led invasion of the country in March, 2003.
Norrish added: “The killing of al-Zarqawi will do very little to alleviate the problems which are currently plaguing the Iraqi oil industry.
“Lack of authority and sectarian disputes — will not end, while the poor state of the Iraqi oil infrastructure following from years of underinvestment will continue to keep Iraqi exports unreliable.”—AFP
