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Oil mixed as Mideast tensions simmer

Dec 30 2011 08:44
AFP

Singapore - Oil prices were mixed in Asian trade on Friday amid heightened tensions between the United States and major crude producer Iran, analysts said.

In afternoon trade, New York's main contract West Texas Intermediate light sweet crude for February delivery gained 20 cents to $99.65 a barrel, and Brent North Sea crude for February was down 2c at $107.99 a barrel.

A showdown between Iran and the United States over Tehran's threats to close the Strait of Hormuz - a critical passage for more than a third of the world's oil - is the main factor influencing short-term crude prices, analysts said.

"It's a cat and mouse game," said Jonathan Barratt, Sydney-based chief executive of Barratt's Bulletin (barrattsbulletin.com), an independent commodity research firm.

"There is still a risk premium that will be brought into the market," he said.

The United States said on Thursday that Iran had exhibited "irrational behaviour" by threatening to close a major oil shipping lane it also needs.

"One can only guess that the international sanctions are beginning to feel the pinch, and that the ratcheting up of pressure, particularly on their oil sector, is pinching in a way that is causing them to lash out," US state department spokesperson Victoria Nuland said.

The United States and the European Union are considering new sanctions aimed at Iran's oil and financial sectors. But the EU has been divided over whether to impose an embargo on the country's crude.

Iranian Vice-President Mohammad Reza Rahimi has warned that "not a drop of oil will pass through the Strait of Hormuz" if the West adopts sanctions.

The closure could cause havoc on world oil markets, disrupting the fragile global economy, although analysts say the Islamic republic is unlikely to take such drastic steps as it relies on the route for its own oil exports.

iran  |  commodities  |  markets  |  oil

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