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London - Brent crude rose more than $1 to over $113 on Thursday on worries a showdown between Iran and the West in the Middle East Gulf and a strike in Nigeria could disrupt oil supplies.
Tension between the West and Iran over the Islamic republic’s nuclear programme has increased after an Iranian nuclear scientist was blown up in his car by a motorbike hitman on Wednesday, prompting Tehran to blame Israeli and US agents.
Brent crude futures for February rose $1.41 to a high of $113.65 a barrel and traded close to that level in the early afternoon. US crude oil was up more than $1 above $102.
Iran has threatened to close the Strait of Hormuz, a critical shipping chokepoint for oil, if the United States and its allies impose an embargo on its oil exports.
Washington imposed additional sanctions on Iran last month and the European Union will have a meeting on January 23 to decide whether to embargo Iran’s oil.
Tensions elsewhere in the Middle East have also risen, as a Frenchman became the first foreign journalist to be killed in 10 months of unrest in Syria.
“You’ve got the same potentially bullish factors - Iran, Syria, Nigeria - in the background,” said Christopher Bellew, a broker at Jefferies Bache in London. “If it weren’t for Iran, probably prices would be lower.”
Nigerian strike
As Washington steps up efforts to punish Tehran over its nuclear programme, Japan and South Korea are looking to reduce oil imports from Iran and seek alternative sources instead.
Japan, one of the biggest buyers of Iranian oil, pledged on Thursday to take action to cut its Iran crude imports after US Treasury Secretary Timothy Geithner visited Tokyo to hold talks with Japanese leaders.
Another worry for oil markets is a strike and protests in Nigeria against the scrapping of a fuel subsidy. Nigeria’s biggest oil union said it was ready to halt oil output if the government did not reinstate the subsidy.
Output has so far been unaffected but the threats were enough to unnerve the market, as Africa’s biggest oil exporter ships around 2 million barrels of crude oil per day and is a key supplier to the United States and Europe. Worries about supply allowed investors to discount reports of sharply higher US crude stocks.
Inventories surged by almost 5 million barrels to 334.65 million barrels in the week to January 6, data from the US Energy Information Administration (EIA) showed. This was well above estimates for an 800 000 barrel build in a Reuters poll of analysts.
Japan’s commercial crude oil stocks were also up, rising almost 3 million barrels, or 3.1%, from the week before to 15.9 million kilolitres (99.7 million barrels), the Petroleum Association of Japan said.
Investors were encouraged by a successful Spanish bond auction on Thursday, the first test in the new year of investor appetite for the debt of peripheral eurozone countries.
Spain sold €10bn ($12.7bn) of bonds, double its previously announced target, with falling average yields.
European shares extended gains on Thursday after the auction, with the FTSEurofirst 300 index up 0.7% by 10:50 GMT. The euro rose to a day’s high of $1.2756 after the Spanish bond sale.
But Bellew said the good news out of Madrid was not enough to assuage investor concerns about weak eurozone growth.
The currency bloc’s debt crisis has put enormous pressure on the euro, helping boost the dollar, which often moves inversely to commodities prices.
“On the downside (we have) the strong dollar against the euro, weak economies in the eurozone, the relatively warm weather we’re having in the northern hemisphere,” Bellew said.
Tension between the West and Iran over the Islamic republic’s nuclear programme has increased after an Iranian nuclear scientist was blown up in his car by a motorbike hitman on Wednesday, prompting Tehran to blame Israeli and US agents.
Brent crude futures for February rose $1.41 to a high of $113.65 a barrel and traded close to that level in the early afternoon. US crude oil was up more than $1 above $102.
Iran has threatened to close the Strait of Hormuz, a critical shipping chokepoint for oil, if the United States and its allies impose an embargo on its oil exports.
Washington imposed additional sanctions on Iran last month and the European Union will have a meeting on January 23 to decide whether to embargo Iran’s oil.
Tensions elsewhere in the Middle East have also risen, as a Frenchman became the first foreign journalist to be killed in 10 months of unrest in Syria.
“You’ve got the same potentially bullish factors - Iran, Syria, Nigeria - in the background,” said Christopher Bellew, a broker at Jefferies Bache in London. “If it weren’t for Iran, probably prices would be lower.”
Nigerian strike
As Washington steps up efforts to punish Tehran over its nuclear programme, Japan and South Korea are looking to reduce oil imports from Iran and seek alternative sources instead.
Japan, one of the biggest buyers of Iranian oil, pledged on Thursday to take action to cut its Iran crude imports after US Treasury Secretary Timothy Geithner visited Tokyo to hold talks with Japanese leaders.
Another worry for oil markets is a strike and protests in Nigeria against the scrapping of a fuel subsidy. Nigeria’s biggest oil union said it was ready to halt oil output if the government did not reinstate the subsidy.
Output has so far been unaffected but the threats were enough to unnerve the market, as Africa’s biggest oil exporter ships around 2 million barrels of crude oil per day and is a key supplier to the United States and Europe. Worries about supply allowed investors to discount reports of sharply higher US crude stocks.
Inventories surged by almost 5 million barrels to 334.65 million barrels in the week to January 6, data from the US Energy Information Administration (EIA) showed. This was well above estimates for an 800 000 barrel build in a Reuters poll of analysts.
Japan’s commercial crude oil stocks were also up, rising almost 3 million barrels, or 3.1%, from the week before to 15.9 million kilolitres (99.7 million barrels), the Petroleum Association of Japan said.
Investors were encouraged by a successful Spanish bond auction on Thursday, the first test in the new year of investor appetite for the debt of peripheral eurozone countries.
Spain sold €10bn ($12.7bn) of bonds, double its previously announced target, with falling average yields.
European shares extended gains on Thursday after the auction, with the FTSEurofirst 300 index up 0.7% by 10:50 GMT. The euro rose to a day’s high of $1.2756 after the Spanish bond sale.
But Bellew said the good news out of Madrid was not enough to assuage investor concerns about weak eurozone growth.
The currency bloc’s debt crisis has put enormous pressure on the euro, helping boost the dollar, which often moves inversely to commodities prices.
“On the downside (we have) the strong dollar against the euro, weak economies in the eurozone, the relatively warm weather we’re having in the northern hemisphere,” Bellew said.
