Supply fears to fuel oil price

13 April 2012

ALL eyes will be on this week's meeting of the Organisation of Petroleum Exporting Countries (Opec), the oil-producing nations' cartel, after the Al Qaeda atrocity in Saudi Arabia raised the spectre of disrupted oil supplies.

Crude prices are expected to surge sharply higher as the hostage-taking crisis in Khobar at the weekend raised fresh fears over the security of the world's biggest oil exporter.

Opec members are due to meet on Thursday in Beirut and are expected to increase oil output in an attempt to stabilise prices.

Experts warned any further increases in the price of oil, already hovering near 21-year highs at almost $40 a barrel, would hit the global economy at a time when demand is reaching its summer peak.

Qatari energy minister Abdullah bin Hamad al-Attiya said the cartel will produce 'as much as the market can absorb' and forecasts Opec will increase production to its official production ceiling.

Stock markets in the UK and US were closed yesterday for public holidays, but a number of Asian markets including the Japanese Nikkei fell amid the uncertainty.

The price of gold, a traditional safe haven in times of trouble, rose while the dollar weakened on renewed fears of inflation in the US.

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