Crude prices climbed in Asian trading yesterday on rising tensions in the Middle East after the EU imposed an embargo on Iran’s oil exports.
New York’s main contract, West Texas Intermediate crude for delivery in March, was up US$0.15 at US$99.73 a barrel in the afternoon. Brent North Sea crude for March delivery gained US$0.17 to US$110.75.
“The main bullish factor in the market has to be the situation with Iran,” said Tony Nunan, energy risk manager at Mitsubishi Corp in Tokyo.
“We will see a movement of prices depending on how Iran reacts to these sanctions. It will also depend on how much of the slack other OPEC producers pick up, especially Saudi Arabia,” he told reporters.
After weeks of negotiations, the EU on Monday slapped the embargo on Tehran as part of a concerted effort with the US to pressure the country to halt its controversial nuclear activities.
Western powers suspect Iran is trying to build an atomic bomb, but Iranian officials say the nuclear program is purely for civilian use.
While new imports of Iranian oil have been immediately banned, EU foreign ministers have agreed to allow existing contracts to be phased in through to July 1, to limit the impact on countries like Greece, which are heavily dependent on Tehran for their oil.
They also froze the assets of Iran’s central bank while ensuring legitimate trade under strict conditions.
Saudi Arabia, the world’s largest crude producer, had previously pledged to use its spare capacity to compensate for reductions in Iranian imports brought about by the embargo.
Officials in Tehran yesterday shrugged off the new EU sanctions, and declared that the country can find new markets for its oil.
Meanwhile, concerns over the spiraling debt crisis in Europe eased slightly on Monday as Germany and France said they were committed to a new bailout for Greece, analysts said.