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Oil rises to nine-month high on Iran export halt, europe talks
Oil rose to a nine-month high in New York after Iran said it halted some crude exports and investors bet that fuel demand will increase as Europe moves closer to bailing out Greece.
Futures climbed as much as 1.9 percent for a fourth day of gains, the longest rising streak since December. Iran will supply crude to “new customers” instead of companies in the U.K. and France, the oil ministry’s news website, Shana, said, citing Alireza Nikzad Rahbar, a spokesman. Prices also advanced as European finance ministers prepared to meet to discuss a 130 billion-euro ($172 billion) aid package for Greece, the country’s second rescue in less than two years.
“The heightened level of tension surrounding Iran’s nuclear program continues to support prices, as does satisfactory growth in the U.S. and China,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who correctly predicted last week that the price of Brent crude would advance to $120 a barrel.
Crude for March delivery rose as much as $1.97 to $105.21 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday price since May 5. The contract, which expires tomorrow, was at $104.92 at 11 a.m. London time. The more actively traded April contract gained $1.70 to $105.30. Prices increased 4.6 percent last week and are up 6.2 percent so far this year.
Brent oil for April settlement on the London-based ICE Futures Europe exchange climbed as much as $1.57, or 1.3 percent, to $121.15 a barrel. The European benchmark contract was at a premium of $15.39 to New York-traded crude. The difference was a record $27.88 on Oct. 14.
Iran’s suspension of exports followed a warning by its oil minister that Tehran might preempt a European Union ban on purchases of the nation’s crude planned to start July 1, Rahbar said without giving further details, according to the Shana report yesterday. The EU and U.S. imposed sanctions on Iran, the second-largest oil producer in the Organization of Petroleum Exporting Countries, in an attempt to halt its nuclear program. EU nations bought a combined 18 percent of Iran’s crude and condensate exports, or 452,000 barrels a day, in the first half of 2011, according to the most recent data on the website of the U.S. Energy Information Administration. France purchased 2 percent of Iran’s shipments, or 49,000 barrels a day, while the U.K. took less than 1 percent, the data showed.
The EU said it has sufficient supplies of oil and petroleum products to weather a disruption in Iranian supplies. Stockpiles are at 136 million tons or 120 days of consumption, “well above the 90-day minimum,” Marlene Holzner, an EU spokeswoman, said today in an e-mailed statement.
“The continuity of supplies of crude oil and petroleum products to European consumers should therefore not be immediately affected, even in case of an abrupt halt of all imports from Iran,” Holzner said.
Finance Ministers Meeting
European finance ministers meet in Brussels as they seek to avert the first sovereign default in the euro’s 13-year history. Greek Prime Minister Lucas Papademos told ministers this weekend he found all the extra spending cuts needed to secure a bailout, according to an e-mailed transcript of a Feb. 18 cabinet meeting in Athens.
“Sentiment in the market has changed in the last week,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo who predicts oil will reach $110 a barrel in the near term. “We had news that Iran stopped some exports so that might have pushed up prices. The euro countries have no choice but to accept an agreement; otherwise everything will collapse.”
Oil also increased with stocks after China cut reserve ratios at its banks to boost lending and economic growth as the country’s housing market cools and the European debt crisis weighs on exports. The MSCI Asia Pacific index was up 0.8 percent at 127.96 in Tokyo, extending the longest run of weekly gains since 2005.
China accounted for about 11 percent of global oil demand in 2010 and the 27 EU member states consumed 16 percent, according to BP’s annual Statistical Review of World Energy.
With assistance from Ewa Krukowska in Brussels. Editors: John Buckley, Bruce Stanley
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