Oil prices spike after Iran seizes yacht

AP News
Posted: Nov 30, 2009 4:34 PM

Oil prices jumped Monday after Britian said a racing yacht was seized by Iran in the Persian Gulf and that five U.K. nationals were being held.

Crude quickly climbed $1.23 and settled at $77.28 a barrel on the New York Mercantile Exchange.

The yacht may have strayed inadvertently into Iranian waters when it was stopped last Wednesday, British officials said.

It isn't the first time that Iran has taken custody of Britains at sea and energy prices rose on the specter of an extended standoff with one of the world's biggest producers of oil.

Two years ago 15 British military personnel were seized in the Gulf by Iran. They were charged them with trespassing in its waters, but all were eventually freed.

The jump in prices comes as the gap between what drivers are paying for gasoline in the U.S. compared with a year ago is widening. That gap will likely grow through December, largely because prices were in freefall last year at this time.

Prices at the pump in the U.S. averaged $2.629 a gallon on Monday, 80.4 cents more a gallon than a year ago, according to auto club AAA, Wright Express and Oil Price Information Services. The difference is about $40 per month for a typical motorist.

The Energy Information Administration said Monday in its weekly update that the national average price for a gallon of regular unleaded gasoline fell a penny from last week to $2.629 a gallon. Prices have been flat for two weeks.

Current pump prices are being compared with last year when prices tumbled to $1.61 as the recession deepened and demand for fuel crumbled.

Consumers now are paying about $1 billion a day for gasoline, about $300 million more each day for gasoline.

At some point during the next couple weeks, oil prices are expected to be twice what they were a year ago, when a barrel of crude fell as low as $32.40.

The rapid rise in prices is worse for consumers this time around.

When crude last doubled, in early 2000, a barrel cost only about $10.

In other Nymex trading, heating oil for December delivery added 5.6 cents to settle at $2.0181 a gallon. Gasoline added 7.46 cents to settle just above $2 a gallon. Natural gas shed nearly 7 percent, or 34.4 cents to settle at $4.848 per 1,000 cubic feet

In London, Brent crude for January delivery rose $1.29 to settle at $78.47 on the ICE Futures exchange.


Associated Press writers Pablo Gorondi in Budapest and Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.