Oil prices remain high on global turmoil

New York: The price of oil retreated slightly but remained elevated because of political turmoil around the world. Concern that conflicts and rising tensions in the Ukraine and the Middle East could disrupt supplies sent oil prices higher this week, though the world appears to have an ample supply of crude and supplies have not been affected.

The industry calls this higher price, based only on fear, a 'risk premium'.  "Developments during the past couple of days have added to a long list of geopolitical hot spots," wrote energy analyst Jim Ritterbusch in a note to clients, which he says "will force the oil complex to maintain significant amount of risk premium."

Benchmark US crude for August delivery fell 6 cents to close at $103.13 a barrel on the New York Mercantile Exchange. It rose 2.2 percent for the week. Brent crude for September delivery, a benchmark for international oils, fell 65 cents to close at $107.24 on the ICE Futures exchange in London.

US crude closed under $100 per barrel Tuesday for the first time since May, but that marked the end of a three-week slide in prices. A large draw in U.S. oil inventories pushed prices higher Wednesday and then a series of political events gave the market more jitters.

The Obama Administration announced increased sanctions on Russia Wednesday, including against Russia's largest oil company, over Russia's support of rebels in Ukraine. Then a Malaysian Airlines passenger plane was shot down over Ukraine Thursday, raising concerns that a wider conflict or further sanctions could disrupt supplies from Russia, the world's biggest crude exporter outside of OPEC.

And later Thursday Israel launched a ground offensive into Gaza, intensifying turmoil in the Middle East, the world's most important oil-producing region. These threats to global oil production remain just threats, and analysts say the likelihood of supply interruptions is small. But it's enough for buyers to buy more oil futures now, to protect against an actual disruption that sends prices rocketing higher.

"Crude oil prices are expected to continue their recent uptrend due to increasing volatility in the oil market following the uncertainty in Middle East and highly tentative conditions between Ukraine, Russia and the West," said analyst Myrto Sokou from Sucden Financial Research in London.

In other Nymex trading:

• Wholesale gasoline fell 2.2 cents to close at $2.860 a gallon.
• Natural gas fell 0.3 cent to close at $3.951 per 1,000 cubic feet.
• Heating oil fell 1.4 cents to close at $2.845 a gallon.