Oil price rises to $113 on Nigeria, Iran unrests

Posted by admin Africa & World Politics, Headlines Tuesday, January 10th, 2012

Oil price rose to around $113 a barrel on Tuesday as unrest in Nigeria and tension over Iran’s nuclear programme outweighed persistent concerns about the strength of Europe’s economy.

Supply risks are also in focus in Nigeria, where nationwide strike by trade unions and civil society groups enters its third day today.

The strike has, however, not affected shipments from Nigeria, which is Africa’s largest oil exporter, according to Reuters.

Brent crude rose by 65 cents to $113.10 a barrel by 1215 GMT, following a decline of 61 cents on Monday. The United States crude was up by $1.33 to $102.64.

Iran has begun enriching uranium deep inside a mountain and has sentenced an American to death for spying, causing anger in the West and undermining expectations that diplomacy could avert further sanctions or even war.

“On balance the bulls seem to be winning, despite the strong dollar, weak demand in the euro zone and a mild winter in the northern hemisphere,” a broker at Jefferies Bache, Christopher Bellew, was quoted as saying.

Punch

The tension over Iran’s nuclear programme, which Tehran insists is for peaceful purposes, has included threats by the country to shut the Strait of Hormuz, the world’s most important oil export route.

European Union states, which have already agreed in principle to an embargo on Iranian oil to ratchet up pressure on Tehran, are due to hold a meeting to decide on the measure on January 23, according to European Union diplomats.

Iran produces 3.5 million barrels per day of crude, making it the second-largest producer in the Organisation of the Petroleum Exporting Countries after Saudi Arabia. The EU imports about 500,000 bpd from Iran.

“Despite demand conditions being relatively weak, oil prices are still above $100 because of the geopolitical tensions. There is a floor on prices at the moment,” an analyst at ANZ, Natalie Robertson, said.

Brent is trading close to its 200-day moving average at $112.70, which remains a key level of technical support, said Olivier Jakob of Petromatrix. First resistance is at $114, where recent rallies have run out of steam.

While threats to supplies supported oil prices, economic weakness in Europe has limited gains.

The euro rose on Tuesday after hitting a 16-month low versus the dollar on Monday. Investors remain concerned about the outlook for the region’s economy and banks, and the prospects for government debt sales.

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