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Last Updated: Monday, 1 August 2005, 20:18 GMT 21:18 UK
Market jitters drive oil over $62
Oil traders on Nymex on 1 August
Market jitters pumped up oil prices
Oil prices have hit new records after the death of Saudi Arabia's king and amid concerns over refineries and Iran.

US light sweet crude surged $1.73 higher to $62.30 on the Nymex exchange before closing at $61.60.

In the UK, benchmark Brent crude closed $1.02 up at $60.39, just off a session high of $60.98.

Analysts said concerns over the Saudi succession, as well as US refinery outages and tensions over Iran's nuclear ambitions had upset the market.

King Fahd, Saudi Arabia's ruler since 1982, died on Monday at the age of 84.

Uncertain future

Crown Prince Abdullah is set to take over from King Fahd - but as he is also an octogenarian, dealers are worried about the country's economic future.

Crown Prince Abdullah has vowed to stick to Saudi's long-standing oil policy, which aims to keep the markets well supplied, but after his reign the policy is less certain.

Man kissing TV screen showing King Fahd after announcement of his death

"For the first time people are thinking about life after Abdullah. The succession there is not as clear," Rick Mueller, an analyst at Energy Security Analysis, told Reuters.

Meanwhile, experts are also concerned about whether the US can meet strong demand following a number of refinery problems.

Production fears

Prices surged on Friday in the wake of fires at two US oil refineries and a North Sea rig.

Analyst talk has sparked concerns that US supply lines are overstretched - leaving plants showing clear signs of "exhaustion".

Oil giant BP closed its oil production unit in Texas City - its third largest US plant - for maintenance after a fire last week.

Meanwhile, industry sources said Exxon closed its 235,000-barrel-per-day refinery in Illinois.

Iran, the second-largest oil producer in oil cartel Opec, also added to market fears with its announcement that it was set to restart nuclear processing.

A letter from Tehran to the United Nations said it would break seals placed on the facility by the UN nuclear watchdog in late 2004.

The move was in defiance of European Union warnings and could lead to the case being sent to the United Nations, resulting in sanctions being placed on Iran.


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