Oil prices jumped to a nine-month high above $105 a barrel on Monday after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country’s nuclear program.
By Monday afternoon, benchmark March crude was up $2.02 to $105.26 per barrel in electronic trading on the New York Mercantile Exchange, the highest since May. The contract rose 93 cents to settle at $103.24 per barrel in New York on Friday.
Iran’s announcement will likely have minimal impact on supplies, analysts said, because only about 3 percent of France’s oil consumption is from Iranian sources. Britain had not imported oil from the Islamic republic in six months.
“The price rise is more a reflection of concerns about the further escalation in tensions between Iran and the West,” said commodity analyst Caroline Bain of the Economist Intelligence Unit. “Banning the tiny quantities of exports to the U.K. and France involves very little risk for Iran — indeed quite the opposite, it catches the headlines and leads to a higher global oil price, which is something Iran is very keen to encourage.”
Markets in the United States are closed Monday for the Presidents Day holiday.
Iran’s oil ministry said Sunday it stopped crude shipments to British and French companies in an apparent pre-emptive blow against the European Union after the bloc imposed sanctions on Iran’s crucial fuel exports. They include a freeze of the country’s central bank assets and an oil embargo set to begin in July.
Iran’s Oil Minister Rostam Qassemi had warned earlier this month that Tehran could cut off oil exports to “hostile” European nations. The 27-nation EU accounts for about 18 percent of Iran’s oil exports.
Tehran also is considering extending the embargo to other European countries, a semiofficial Iranian news agency reported Monday.
The head of Iran’s state oil company Ahmad Qalehbani was quoted by the Mehr agency as saying that the country would stop selling crude to nations who take action against Tehran.
The EU sanctions, along with other punitive measures imposed by the U.S., are part of Western efforts to derail Iran’s disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies the charges, and says its program is for peaceful purposes.
Oil prices also rose on hopes that Greece’s new bailout deal will be approved on Monday as well as by China’s decision to boost money supply bid to spur lending and economic growth. China’s central bank said Saturday it will lower the ratio of funds that banks must hold as reserves, a move that frees tens of billions of dollars.
Oil has jumped from $96 earlier this month amid optimism the global economy may grow more this year than previously expected. J.P. Morgan raised its Brent crude price forecast to as high as $135 from $120 — on Monday, the April Brent crude contract was up 79 cents at $120.37 per barrel on the ICE Futures exchange.
“Building economic momentum has the potential to pull oil prices higher for the next 12 to 24 months,” J.P. Morgan said in a report.
In other energy trading in March contracts, heating oil gained 3 cents to $3.22 per gallon and gasoline futures rose 3.2 cents to $3.22 per gallon. Natural gas lost 7 cents to $2.62 per 1,000 cubic feet.
In other news liberals are cheering Obama for increasing our production estimate from 6 Million barrels to 6.9 million, but in reality that still doesn’t get us back to the 10 million we used to produce.
Get ready for the whining crybabies to start complaining about independent gas stations raising their prices to cover the coming price increase they’ll see from their distributors.
Good thing we got the Keystone pipeline…. (sarcasm off)
Good they started the embargo on themselves early! I will not take long before they run out of money. There people are all ready saying the cost of everything has sky rocketed. I give them 6 – 8 months before they come crying to end the oil embargo. In the US we need to start using CNG in our cars. We can make the switch very easely if we would just work at it. Once people see the savings at the pump they will be willing to pay to convert their cars and trucks.
Why should we complain? As long as the investors and oil companies are making a fortune out of us, then we have no gripe. We are only here to fill these people’s bank accounts. Well that is the way they look at the effects of rising oil prices, that they force up.
“Oil jumps to 9-month high after Iran cuts supply”
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where is the prog outrage at soaring gasoline prices?
(crickets)
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I agree with Robert. We need CNG for use in our own vehicles. Even in third world countries, they’ve experimented with LPG in cars. They would hook up the cylinders inside and run that when prices start to going up for fuel. And why can’t we do that here in the US?
Interesting how our gas prices go up even though we don’t get any of our oil from Iran, and there is no shortage whatsoever. That is why speculation of vital commodities like oil should be outlawed.
It will seem like the good old days when oil only cost $105.00 per barrel. After the war, gas will be about $15.00 per gallon for starters and food, why if you can find it, it will be about a days wages for a loaf of bread. Water will be the new gold and it will be illegal to take a shower that is not approved of by the state.
Independent service stations get their gasoline from the same place everyone does. Deregulation has driven independent Refiners out of business. So Major Oil Companies Control Crude production, shipping, Refining and Distribution. They also Control Fuel Inventories in the U.S. but they sell Billions of their production capacity to Foreign Countries where they can get higher profits. They are also Partnered to Arab Oil producing Countries.
Oil Companies are rattling swords at Iran through Republican Propaganda machines and Government Sources.
Alex, we’ve talked about this before on FuelFix. Natural-gas powered cars are in a catch 22 situation. Consumers aren’t inclined to buy them because of the lack of pumps (for example, there are 45 in Texas). The government or cars companies aren’t interested in building that infrastructure, because they don’t see the demand for it.
“A nation of sheep will beget a government of wolves.”
That might have been the case then, but with the way things are going now, I’m pretty sure that might need to be visited once again. All of our Metro buses should be running on CNG, not just some of them. Major corporations like Coca-Cola/Pepsi, that does delivery services should be running on hybrid motors. City/County vehicles should be all CNG/hybrid based. School buses should be running on the same too. Once you have demand in those sectors, you will see entrepreneurs trying to bring it to those who need it for their daily drivers.
Iran will simply export the oil to Russia and China. It is not going to hurt them financially.
All Obamas fault in spite of the fact that another story in today’s paper contains the following:
The United States’ rapidly declining crude oil supply has made a stunning about-face, shredding federal oil projections and putting energy independence in sight of some analyst forecasts.
After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation’s oil fields, suggesting a surge in domestic crude is on the horizon.
The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world.
Whatever Iran does is irrelevant to us. In 1975, we established the Department of Energy to decrease America’s dependence on foreign oil. The DOE has done a fabulous job (as all government agencies do), and we have no oil problems whatever now. Perhaps the DOE should run Obamacare, it’s such an effective outfit.
MrOldMan
February 20, 2012, 7:55 AM
Interesting how our gas prices go up even though we don’t get any of our oil from Iran, and there is no shortage whatsoever. That is why speculation of vital commodities like oil should be outlawed.
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What’s even more interesting is the fact that neither do Britain or France buy from Iran. I can only speculate that all this posturing by Iran is to push the price of oil up and up.
http://online.wsj.com/article/SB10001424052970204909104577235031310407346.html