Oil prices have hit all time highs for consumers in the euro zone and U.K., but prices aren't expected to come down any time soon, as concerns over supply risks seem to far outweigh the risks of demand destruction, analysts said.
Straining tensions between Iran and the West are propping up oil prices at nine-month highs in dollar terms, but thanks to a weak exchange rate, prices have already reached record levels for holders of the euro and sterling.
Brent crude rose to a record high of EUR92.75 a barrel Wednesday and Thursday hit an all-time high of GBP78.53.
Normally when prices breach new highs, the event is followed by a flurry of analysis warning about demand destruction and anticipating an imminent pull-back in prices. Not so this time, as the market remains fixated on political game playing between Iran and the West as well as supply disruptions in South Sudan and Syria, which means European consumers are unlikely to get respite any time soon, analysts said.
"The focus is really a lot on the supply side," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.
"On the global balances, as it stands, the prices should not be at the current levels, but the market assumes supply will not stay at current levels," he added.
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