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    Home » Oil reaches six-month high

    Oil reaches six-month high

    February 7, 2012
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    07 February 2012, Sweetcrude, LONDON – The Brent crude oil reached $117 per barrel – a six-month high – on Tuesday over fears that Iran might stop exports to Europe and the supply worries it has orchestrated.

    Brent’s premium to US crude oil widened to more than $20 per barrel, its highest since October, as tensions between the West and Iran escalated and severe wintry weather spread across Europe, boosting heating demand.

    Front-month Brent touched $117.10, up $1.07 and its highest since early August, before easing to around $116.15 a barrel, 22 cents up on the day, by 1450 GMT.

    “The geopolitical events surrounding Iran and the Middle East and the severe cold weather sweeping across Europe are providing support for Brent,” said Victor Shum, senior partner at oil consultancy Purvin & Gertz. “We continue to see more upside risks for oil, but Europe’s debt crisis will weigh.”

    US crude came under pressure from ample domestic supply and rising US oil inventories. US oil fell more than $1 per barrel at one point before recovering to trade around $96.70, down 21 cents, by 1450 GMT.

    “Perhaps $6 to $8 of the Brent premium is attributable to supply risks, mostly concerns about Iran but also worries about supply disruptions from Sudan and Nigeria,” said Carsten Fritsch commodities analyst at Commerzbank in Frankfurt.

    South Sudan and its northern neighbour Sudan, from which it separated in July, are locked in a row over disentangling their oil industries. South Sudan took three-quarters of the oil production but needs to pay for using northern pipelines and the Red Sea port of Port Sudan. South Sudan has shut down its entire output of 350,000 barrels a day in response to the row.

    Clashes in Nigeria are also worrying investors about possible supply disruptions after a pipeline belonging to Italy’s Eni was bombed.

    Escalating violence in Syria is adding to concerns over the stability of the Middle East. Heavy bombardment of the Syrian city of Homs resumed on Tuesday after at least 95 civilians were killed on Monday in an offensive to put down a popular revolt against President Bashar al-Assad’s rule.

    Iran’s parliament said on Tuesday it was ready to impose a ban on oil exports to some European states, the country’s English-language Press TV reported, pre-empting a ban announced by the Union slated to begin from 1 July.

    US President Barack Obama tightened sanctions on Iran another notch, the White House said on Monday, targeting its central bank and giving US banks new powers to freeze assets linked to the government.

    Iran responded to the announcement by calling the decision an “antagonistic move”.

    Analysts said the widening premium for Brent over its US counterpart was largely due to supply fears.

    “Without Iran and other worries over supply, Brent would be more likely to follow US crude,” the Carsten Fritsch commodities analyst at Commerzbank in Frankfurt said.

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