Markets panic, crude goes above $80, more trouble in Nigeria

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
The capture of two Israeli soldiers by Iranian-backed Hizbollah guerrillas operating out of Lebanon flared-up into a full-scale military confrontation, with Israeli attacks on Lebanon's energy infrastructure ( see 'Looking Ahead'). Oil traders, fearing a wider Middle Eastern conflagration, bid-up the price of crude oil to new record levels. Prompt WTI futures hit $78.40/bbl on 14th July and three days later, prompt IPE Brent went to a record $78.18/bbl. The outer months rose even higher, with March, April and May WTI all above $80/bbl. Iran tried to dampen the markets by saying it would not use the oil weapon in support of its Hizbollah allies, and prices eventually eased. The seaborne trade in oil in the Eastern Mediterranean was disrupted by the closure of ports in Israel and Lebanon and a rise in insurance premiums for voyages to ports nearby. Outside the Levant, markets remained well-supplied with oil.