Oil turns mixed in Asian trade

2012-01-09 08:47

Singapore - Oil prices were mixed in Asia on Monday as traders weighed concerns the European debt crisis could worsen with tensions over Iran's threat to block a vital oil shipping lane, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in February was down 51 cents to $101.05 in afternoon trade.

Brent North Sea crude for February delivery gained 14c to $113.20.

"Pressures concerning the debt situation in Europe is offsetting the bullish factor of geopolitical tension in the Middle East," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.

French and German leaders are set to meet in Berlin on Monday, kicking off a week of high-level talks aimed at laying the groundwork to tame the eurozone crisis.

The talks are being held amid growing strategic differences between the two economic giants over plans to introduce a financial transaction tax in the European Union.

Traders meanwhile are also keeping a close watch on the situation in the Strait of Hormuz in the Middle East and its impact on the flow of oil supplies, analysts said.

Iran has threatened to close the key transit point if the EU slaps a ban on imports of its oil as a part of sanctions aimed at stopping Tehran from developing its nuclear programme.

The country has denied allegations it is building atomic weapons.

"It is understood that Western powers have readied a contingency plan to tap a record volume from emergency reserves to replace nearly all the Gulf oil that would be lost if Iran blocks the Strait of Hormuz," Phillip Futures said in a market commentary.

US Defence Secretary Leon Panetta on Sunday warned that the United States would take action if Tehran tries to close the vital strait.

"I think they need to know that if they take that step that they're going to get stopped," Panetta told CBS television.