BUDAPEST, Hungary -- Crude prices soared past $61 a barrel today after the death of Saudi Arabia's King Fahd, but eased back a bit on reassurances that the nation's oil policy would not change.
The ruler of the world's largest oil producer died early today after a prolonged hospitalization, the Saudi royal court announced. His brother, Crown Prince Abdullah, who has been Saudi Arabia's de facto leader during the past decade, was appointed the new monarch.
King Fahd brought the kingdom, holder of the world's largest oil reserves, closer to the United States during his rule.
Analysts said King Fahd's death was unlikely to affect oil supply from Saudi Arabia and the impact of the news was expected to be temporary. Prices retreated below $61 a barrel as Saudi Arabia's ambassador to Britain, Prince Turki bin al-Faisal, said the nation wouldn't change its policy on oil or other matters.
By midafternoon in Europe, light, sweet crude for September delivery was at $60.88 on the New York Mercantile Exchange, up 31 cents but off the session high of $61.23.
Heating oil was up a cent and a half at $1.6908 a gallon (3.8 liters), while gasoline gained more than a cent to trade at $1.7410 a gallon.
September Brent futures at London's International Petroleum Exchange were up 43 cents at $59.80 a barrel, down from a high of $60.11.
Oil futures hit an intraday record of $62.10 a barrel on July 7, and prices remain about 40 percent higher than year-ago levels.
Meanwhile, traders watched for details on the impact on production after fires at two U.S. refineries last Thursday. BP has said gasoline output at its Texas City plant was cut by 35,000 barrels a day.
With gasoline stocks in the United States -- the world's largest energy consumer -- having fallen for the past few weeks to the lowest levels since late last year, the market remains edgy about tight supply.
Also keeping markets jittery was Iran's latest threat to restart its nuclear enrichment program, sparking concerns that tension between Tehran and Western nations could disrupt oil supplies from OPEC's second-largest exporter.
Iran threatened on Sunday to restart uranium reprocessing work if negotiators from Britain, France and Germany do not immediately offer a promised package of incentives to entice Tehran to freeze its nuclear program.
Iran's parliamentary speaker set a Monday deadline for European negotiators to come up with a list of incentives. Gholam Ali Hadad Adel warned that the deadline was the "final opportunity" for Europeans to submit such a list.
"If supply from Iran is suspended because of geopolitical developments, it will be a severe threat to the world's oil supply," said senior commodities strategist Tetsu Emori of Mitsui Bussan Futures in Tokyo. "It's not a small issue."
Tehran halted uranium enrichment in November under international pressure led by the United States, which says the country's nuclear program is aimed at making weapons. Iran maintains its program is peaceful.
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