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Oil prices top US$147 on Iran, dollar concerns
Posted: 11 July 2008 2207 hrs
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LONDON - Oil prices rocketed to record highs above 147 US dollars on Friday as traders seized on the weak US currency and tensions over Iran and Nigeria at the end of a very volatile trading week.
London's Brent North Sea oil for August delivery jumped as high as 147.50 US dollars to beat the previous record of 146.69 US dollars set on July 3.
New York's main oil contract, light sweet crude for August, also topped 147 US dollars for the first time to reach a historic 147.21 US dollars.
Oil prices swept back into record territory after the European single currency leapt as high as 1.5913 dollars -- not far off the historic peak of 1.6019 that was hit on April 22.
The weak dollar boosts demand for dollar-priced oil which becomes cheaper for buyers using stronger currencies, analysts said.
"Crude futures continued to rally today (Friday), extending their gains from yesterday on renewed geopolitical and supply fears," said Sucden analyst Andrey Kryuchenkov.
"As ever, the market remains very sensitive to any potential supply disruptions and geopolitical tensions," he added.
Oil rallied by almost six US dollars on Thursday on the back of simmering geopolitical tensions over key producer Iran and worries over stretched global crude supplies, traders said.
Oil had dived below 140 US dollars on Monday as a result of a then strengthening US currency, underlining the extreme volatility that the market is currently experiencing.
On Friday, traders continued to track Iran, which is OPEC's second-biggest crude oil producer with output of about 4.0 million barrels per day.
The White House played down the risk of war between Iran and the United States, despite Iranian missile tests and some tough talk by US Secretary of State Condoleezza Rice.
Rice warned Iran that Washington had beefed up its security presence in the Gulf and would not hesitate to defend its ally Israel.
Iran insists its nuclear drive is aimed solely at generating energy but some Western nations fear it could be aimed at making an atomic bomb and have called for a freeze of uranium enrichment.
OPEC would not be able to replace Iran's oil production if supplies were halted in case of a war with Israel or the United States, the oil cartel's chief has said.
In crude producer Nigeria, meanwhile, kidnappers seized at least one foreigner working for a German company in the restive Niger Delta oil region, a police source said on Friday.
The delta has seen numerous kidnappings targeting foreign energy firms, claimed by militants who demand a greater share of the oil wealth for the region's inhabitants.
Violence in the southern delta region has already reduced Nigeria's total oil production by a quarter since January 2006.
Record oil prices have sparked protests worldwide as people struggle to cope with soaring costs of energy. - AFP/ir
Sinosteel snares Midwest as China Inc flexes muscles in Australia
Posted: 11 July 2008 2311 hrs
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SYDNEY : China's Sinosteel won a seven-month battle for control of Australian iron ore miner Midwest Friday and analysts said it remains keen to snap up more resource assets in the country.
Midwest told the Australian stock exchange that Sinosteel had acquired a majority 50.97 percent stake to seal the 1.36 billion dollar (1.31 billion US) takeover.
Sinosteel's relentless pursuit of Midwest has sparked debate in Australia about state-controlled Chinese firms -- so-called China Inc -- buying mining firms so they can directly control the resources needed for the country's industrial expansion.
Sinosteel saw off a rival bid from Murchison Metals during the takeover tussle and at one point went hostile after the Midwest board rejected its opening bid of 5.60 dollars a share.
It eventually succeeded after raising its offer to 6.38 dollars a share, securing support from the Midwest board, including several directors who sold their personal stakes in the company to help it exceed the 50 percent mark.
A spokeswoman for Sinosteel's public relations firm said the company had no comment on the development.
But Sinosteel is now expected to turn its attention to Murchison, which controls iron ore deposits in Western Australia close to Midwest's.
Sinosteel applied to Australia's Foreign Investment Review Board earlier this year to lift its stake in Murchison but the regulator has put a decision on hold for three months as it considers the implications.
Analysts said acquiring Murchison would make sense for Sinosteel, with potential savings from a Murchison-Midwest tie-up estimated at 400 million dollars.
"Sinosteel have secured a production base by taking over more than 50 percent of Midwest, so anything else is cherries on top and that's probably what Murchison would be," DJ Carmichael analyst James Wilson said.
"It is an obvious next step, it makes the right sense to have Murchison and Midwest together."
China's interest in gaining control of iron ore supplies has been heightened by skyrocketing prices, including increases of 80-97 percent recently negotiated by Anglo-Australian giants BHP Billiton and Rio Tinto.
Direct ownership of Australian iron ore would help lessen China's dependence on BHP and Rio.
Beijing has expressed concern that BHP's proposal for a 147 billion US dollar merger with its rival would create a behemoth with too much control of world iron ore markets.
China's state-controlled aluminium company Chinalco combined with US-based Alcoa to buy a nine percent stake in Rio for 14 billion US dollars in February in a move seen as a direct response to the merger proposal.
Australian officials predict Chinese investment in Australia could triple to 30 Australian billion dollars (28.2 billion US) this year.
Treasurer Wayne Swan last week said Australia had an open, non-discriminatory foreign investment policy but would also consider the national interest when examining proposals in the resources sector.
"The question here is, is it in our national interest for a buyer of our resources to control our resource-producing companies?" he told reporters.
"That's the decision that I have to make."
Midwest shares closed up 10 cents at 6.50 dollars in an overall market that was up 0.9 percent.
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| 1 | Date of Purchases | 08-07-2008 | |
| 2a | Total number of shares purchased | 997,000 | |
| 2b | Number of shares cancelled | 0 | |
| 2c | Number of shares held as treasury shares | 997,000 | |
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| II. | Purchases made by way of off-market acquisition on equal access scheme? |
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| 1 Percentage of company's issued shares excluding treasury shares as at the date of the share buy-back resolution 2 From the date on which the share buy-back mandate is obtained |
| (D) | Number of issued shares excluding treasury shares after purchase * | 3,281,300,000 |
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Number of treasury shares held after purchase* | 19,597,000 |