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Oil Prices Plunge on Iran Report NewsMax.com Wires LONDON -- Crude oil prices plunged more than $1 a barrel Monday on a rumors of moves toward peace in the Middle East and in Iran's nuclear standoff with Western nations.
Prices dropped abruptly just before noon in London following talk of progress on Iran, and an optimistic report from Israel.
"Basically, there was a report out from a high-ranking Israeli official who allegedly said they were nearing the end of the offensive," said Paul J. Harris, an analyst for Bank of Ireland Global Markets in Dublin.
"It's probably reflective of the fact that the market is extremely nervous." Story Continues Below
Israel later denied the report.
By afternoon in Europe, light, sweet crude for August delivery was down 38 cents at $76.65 a barrel in electronic trading on the New York Mercantile Exchange. It had earlier traded as high as $77.74 and as low as $75.60.
The contract reached an intraday record of $78.40 a barrel Friday before settling at an all-time closing high of $77.03.
September Brent crude futures on London's ICE Futures exchange were down 58 cents at $77.00 a barrel, after hitting a new high at $78.18 earlier Monday, then dropping to $75.73.
Gasoline futures dropped 2 cents to $2.3450 a gallon while heating oil prices gained less than half a cent to $2.0784 a gallon. Natural gas prices fell 17 cents to $6.175 per 1,000 cubic feet.
Fighting between Israel and militants in Lebanon escalated over the weekend, raising fears of a possible full-blown war. That comes on top of persistent market anxieties about the West's nuclear standoff with Iran, threats of supply disruptions in Nigeria and the Gulf of Mexico hurricane season.
"Slim spare capacity, continued demand and a spate of geopolitical threats to supply all point toward bullish oil markets and yet more upward pressure on crude," said Simon Wardell at Global Insight.
Israeli fighter bombers pummeled Lebanese infrastructure Monday, setting Beirut's port ablaze and hitting a Hezbollah stronghold in attacks that killed at least 17 people. Hezbollah retaliated by firing rockets that flew farther into Israel than ever before. "Oil prices are higher because the conflict between Israel and Lebanon worsened over the weekend, and though that obviously doesn't have any direct impact on physical oil supply, people are having trouble seeing where this all ends," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.
Both Israel and Hezbollah signaled over the weekend that their attacks would only intensify fighting that so far had killed at least 174 in Lebanon and 23 in Israel.
British Prime Minister Tony Blair and U.N. Secretary-General Kofi Annan called Monday for the deployment of international forces to stop the bombardment of Israel from southern Lebanon.
Their comments came a day after world leaders forged a unified response at their G-8 summit to the crisis in the Middle East, blaming Hezbollah and Hamas for the escalating violence and recognizing Israel's right to defend itself - although they called on the Jewish state to show restraint.
© 2006 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. Editor's note: Read more on this subject in related Hot Topics:
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