Oil's not getting cheaper anytime soon
The price of oil has shot up over $63 a barrel, the highest this year. And given the current political landscape and reduction in global inventories, we can probably expect prices above $60 for the foreseeable future.
Gas pump (Justin Sullivan (c) Getty Images)
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TEXT OF INTERVIEW
LISA NAPOLI: Oil is fetching its highest price of the year this morning, just under $63 a barrel. What's with the spike? I talked about it this morning with our European bureau chief Stephen Beard.
STEPHEN BEARD: Well one factor in the rise has been this incident in the Gulf last week, the seizure of 15 British service personnel by Iran. This, however, is only one factor in a generally deteriorating picture. Over the weekend the U.N. voted to slap new and tougher sanctions against Iran for its refusal to stop its uranium enrichment program. The Iranian president dismissed that on Sunday, saying it would not make Iran stop enriching uranium for a second.
NAPOLI: Now there's no reason to believe the sanctions are going to stop the flow of oil?
BEARD: From Iran. No, but they raise the possibility that the situation may escalate and Iran might cut off or reduce some of its exports, which would obviously reduce supply and push up prices.
NAPOLI: Stephen, oil supply seems to be down generally, what's up with that? Where's that coming from?
BEARD: Well it has just emerged that global inventories, that's stocks of oil, have this year fallen the most in a decade. This all flows from OPEC. Last month as planned, it reduced output by a million barrels a day, so this taken with last year's production costs, this is expected to further reduce supply and keep crude above the $60-a-barrel level for the immediate future.
NAPOLI: Thank you Stephen.
BEARD: OK Lisa
