BLBG:Oil Climbs From Lowest This Year on Nigeria Disruptions, Iran Tension
Oil rose from the lowest settlement in almost two weeks in New York on concern that a strike in Nigeria and the threat of sanctions against Iran’s nuclear program will curb crude supplies.
Futures gained as much as 0.6 percent after sliding 1.3 percent yesterday. A Nigerian union said it started shutting platforms in Africa’s largest crude producer to support protests against the end of fuel subsidies. Japan said it may reduce petroleum imports from Iran, which has threatened to shut the Strait of Hormuz in response to sanctions on its oil exports.
“The geopolitical aspect is always popular for putting prices up,” said David Land, head of analysis at CMC Markets in Sydney. “The Strait of Hormuz action is probably regarded a long shot, but if it does happen, it’s going to be a very rapid spike in price. I’ll probably remain quite bullish on oil unless it slips below about the $95 mark.”
Crude for February delivery gained as much as 62 cents to $101.49 a barrel in electronic trading on the New York Mercantile Exchange. It was at $101.27 at 12:47 p.m. Singapore time. The contract yesterday slipped $1.37 to $100.87, the lowest close since Dec. 30. Prices are up 2.4 percent this month.
Brent oil was trading 70 cents higher at $112.94 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a $11.67 premium to West Texas Intermediate futures. The spread was a record $27.88 on Oct. 14.
Nigeria Dispute
Oil has remained above $100 a barrel so far this year as the threat of disrupted supplies from Iran, the second-biggest producer in the Organization of Petroleum Exporting countries, has outweighed concern that Europe’s debt crisis will push the region into recession. The strikes in Nigeria follow production glitches that have already cut shipments.
Members of the Petroleum and Natural Gas Senior Staff Association of Nigeria were told to “be on red alert in preparation for total production shutdown,” Babatunde Ogun, president of the Lagos-based union, said yesterday in an e- mailed statement.
Nigerian President Goodluck Jonathan and striking unions are deadlocked over their demands that the government reverse its decision to abolish fuel subsidies, which more than doubled the price of gasoline. The country produced 2.2 million barrels of crude a day last month, according to Bloomberg estimates.
U.S. Treasury Secretary Timothy F. Geithner’s efforts to tighten economic sanctions on Iran over its nuclear program won backing from Japan a day after China rejected limiting oil imports from the country.
Iran Sanctions
“We want to take concrete steps to reduce our share in an orderly way as soon as possible,” Japan’s Finance Minister Jun Azumi said at a press conference in Tokyo today after discussions with his U.S. counterpart. “The world cannot tolerate nuclear development.”
The U.S. and its allies increased pressure on Iran to halt what they say may be a covert nuclear weapons program. The country’s threat to shut the Strait of Hormuz would disrupt the channel for almost 17 million barrels a day of crude last year, according to the U.S. Energy Department.
Brent oil has “significant upside tail risks” because of escalating tensions in the Middle East, Gordon Kwan, head of regional energy at Mirae Asset Securities HK Ltd. said in a report e-mailed today.
Brent crude has already reached Mirae’s 2012 price target of $115 a barrel and “we cannot rule out a potential short-term price spike” toward $200 a barrel if economic sanctions against Iran lead to military action around the Persian Gulf, Kwan said.
China’s Options
Even as China rebuffed American pressure, Premier Wen Jiabao is planning a trip to alternative oil providers. Wen will visit Saudi Arabia, the United Arab Emirates and Qatar from Jan. 14 to Jan. 19 and attend an international meeting on energy, the foreign ministry said two days ago.
“Iran is one of China’s biggest petroleum suppliers,” Vice Foreign Minister Zhai Jun told reporters in Beijing yesterday. “China hopes that petroleum imports won’t be affected as petroleum is needed for China’s development.”
In a letter to United Nations Secretary General Ban Ki- Moon, the Iranian government charged that a civilian nuclear scientist who was killed by a bomb yesterday was the latest victim of a foreign terror campaign. Officials from Iran have accused the U.S. and Israel of targeting nuclear scientists to halt the nation’s nuclear program.
Refiners in Europe have begun to halt spot purchases of crude from Iran ahead of a European Union meeting this month that could lead to a full oil embargo on the country, the Financial Times reported yesterday, citing industry executives and traders. They are still receiving oil under term contracts, which they can’t break without incurring penalties, the FT said.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net
