Oil over $113 due to fears about Iran
LONDON - ReutersCrude oil rose above $113 a barrel yesterday as concern over a supply disruption due to mounting tensions between Iran and the West countered worries about Europe’s economy and rising U.S. stockpiles.
On Friday, crude was set to rise more than 5 percent in the first week of 2012 after Iran threatened to shut the Strait of Hormuz, in retaliation for tighter sanctions from the U.S. and a possible ban on its crude exports to Europe.
Brent crude rose 58 cents to $113.32 a barrel, after declining by 96 cents on Jan. 5 U.S. crude was up 43 cents to $102.24.
“The supply risk regarding Iran is still boiling. There is also supply risk from Nigeria,” said Carsten Fritsch, analyst at Commerzbank. “It is clear the Jan. 5 drop was short-term only and unlikely to continue.
Still, investors are treading cautiously as eurozone debt problems may worsen and drag down major economies, slowing oil demand. An unexpected 2.2 million-barrel rise in U.S. crude stockpiles also weighed on sentiment.
“Oil could see-saw as the U.S. and Iran play brinkmanship,” said Tony Nunan, a risk manager at Mitsubishi, adding that the global oil demand outlook was murky as the eurozone crisis dragged on. Iran faced the prospect of cutbacks in its oil sales to China and Japan as new measures to block Tehran’s crude exports over its nuclear programme appeared to be hurting its economy.