Oil rises above $106

03 August 2012, Sweetcrude, LONDON – BRENT crude inched above $106 a barrel on Friday in the wake of concerns over supply from the Middle East and the North Sea.
Worries over a slowing global economy, however, capped gains.

The US Congress passed a new package of sanctions against Iran that aims to punish banks, insurance companies and shippers that help Tehran sell its oil.

This builds on oil trade sanctions signed into law in December that prompted buyers in Japan, South Korea, India and others to slash their purchases of Iranian oil.

Brent crude had gained 43 cents to $106.33 per barrel early on Friday, while US rose 36 cents to $87.49. Both prices are on track for their second weekly loss.

“The fighting in Syria, tensions in Iran, the North Sea maintenance plan and reduced Opec daily supply are all coming together and providing support to Brent (prices),” said Nick Trevethan, senior commodities strategist at ANZ Bank in Singapore.

Maintenance work in the British sector of the North Sea will cut oil production in September.

The Brent contract is based on four North Sea crude oils -Brent, Forties, Oseberg and Ekofisk – and export programmes for September were expected to show a sharp drop.

Seaborne oil exports from Opec, excluding Angola and Ecuador, will fall by 120,000 barrels per day in the four weeks to 18 August, UK consultancy Oil Movements said.

Adding to supply uncertainty, Iraq’s semi-autonomous region of Kurdistan plans to halt oil exports on 31 August if the central government does not make all outstanding payments, the region’s minister of natural resources said.

Middle East tensions increased with former UN Secretary-General Kofi Annan quitting as international peace envoy for Syria, frustrated by “finger-pointing” at the United Nations, while the armed rebellion against President Bashar Assad becomes increasingly bloody.

About the Author

  • Let’s hope that the Nigerian leadership is able to take advantage of this rising cost to ensure that the citizenry begin to feel the impact through restoration of dilapidated infrastructure – roads, health care delivery, education, aviation, etc.