Hopes on Iran push oil prices down

(AP) -- Oil prices fell more than $1 a barrel Friday from record levels set a day earlier on hopes that tensions surrounding Iran's nuclear program could ease and cut the chances of American or Israeli military action against OPEC's second-largest oil producer.

Iran on Friday gave an undisclosed response to an international offer of economic and other incentives if it suspends a central part of its nuclear program.

Iran's ambassador to Belgium presented the response to European Union foreign policy chief Javier Solana in Brussels, Iranian state TV reported.

By late afternoon in New York, light, sweet crude for August delivery fell $1.04 to $144.25 a barrel in electronic trading on the New York Mercantile Exchange.

There was no floor trading Friday in New York because of the July Fourth holiday.

Crude futures reached a record high of $145.85 in New York on Thursday before settling at a record close of $145.29 a barrel. Trading volumes were lower than usual.

In London, Brent crude futures fell $1.15 to $144.93 a barrel on the ICE Futures exchange.

Oil prices have risen more than 50 percent so far this year.

Suggestions by Saudi Arabia's oil minister that his country doesn't plan to boost production helped bolster prices earlier in the session.

Saudi Arabian Oil Minister Ali Naimi said Thursday in Madrid that the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so.

Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, "all our buyers are satisfied and happy," he said.

Gains by the dollar Thursday against the euro helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signaled it didn't expect additional rate hikes that might further boost the euro.

On Friday, the dollar was mixed. The euro slipped to $1.5679 from $1.5699 on Thursday while the dollar edged down to 106.65 Japanese yen from 106.77 yen.

A falling dollar has helped boost oil prices this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.

Oil prices are rising amid a drop in stock prices worldwide, with the major stock market indices all down by double digits since the start of the year.

Recent saber-rattling in the Middle East is another reason for this week's increase. Traders are concerned that a conflict with Iran could disrupt tight global supplies.

In other Nymex trade, heating oil futures fell 3.59 cents to $4.0701 a gallon while gasoline prices were down 2.38 cents to $3.5472 a gallon. Natural gas futures lost 0.9 cent to $13.568 per 1,000 cubic feet.

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