Oil prices rose on Friday on the possibility that the International Atomic Energy Agency (IAEA) will refer Iran to the UN Security Council over its nuclear program.
Price gains were limited, though, as the US has said it is not now seeking sanctions against Iran, OPEC's second-largest oil producer. The IAEA board adjourned until yesterday morning without reaching a consensus.
Light, sweet crude for March delivery rose US$0.69 to US$65.37 a barrel on the New York Mercantile Exchange, after sinking to as low as US$63.95 earlier in the day. The contract had dropped US$1.88 a barrel on Thursday.
March Brent futures rose US$0.51 to settle at US$63.39 a barrel on London's ICE Futures exchange.
"The market is uncertain as to what it wants to do at this point. Supply is not the issue," Alaron Trading Corp analyst Phil Flynn said, referring to ample US crude and product inventories.
"The uncertainty about Iran is the issue," Flynn said.
Participants on both sides in the IAEA meeting have said referring Iran to the UN body seemed unavoidable. The UN Security Council could impose sanctions if the agency reports Iran. Even though Iran's oil minister Kazem Vaziri Hamaneh has said Iran won't link the country's oil exports to its nuclear dispute, analysts say the issue is nevertheless a factor in the energy markets.
"Iran needs the money, and the world needs the oil," Flynn said, but any sanction against the country "would increase the anxiety and definitely increase the risk in holding futures."
Heating oil rose more than a US$0.01 to settle at US$1.7816 a gallon (US$0.47 per liter) on the NYMEX, while gasoline gained more than US$0.01 to settle at US$1.6817 a gallon. Natural gas rose US$0.266 to settle at US$8.613 per million British thermal units.
Iran claims its program is peaceful and aimed only at generating electricity, while the US and some European nations fear it could be used to develop weapons.
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