NEWS, 31.05.2012.

 Spain debt woes spur flight from risk

 

Asian shares and commodities slid while the euro fell to its lowest in almost two years against the dollar on Thursday, as surging borrowing costs in troubled Spain raised fears that it could fail to rescue its banks and may need to seek a bailout. Investors fled from risk assets to US government bonds, with the benchmark 10-year Treasury yield falling below 1.6% in early Asian trade on Thursday, its lowest in at least 60 years. The 10-year Japanese government bond yield  hit a nine-year low of 0.810%. The dollar and the yen were also beneficiaries of escalating risk aversion although gold, a traditional safe-haven asset, struggled in the face of the greenback’s strength.     MSCI’s broadest index of Asia-Pacific shares outside Japan tumbled as much as 1.6%, and was set for its worst month in eight months with a drop of nearly 12%. The pan-Asia index was down 0.3% for the year.   The index was dragged down as some key Asian bourses - Hong Kong, Australia and Korea - temporarily fell to negative territory for t h e year. Japan’s Nikkei was down 1.4% on the day and  on track for its biggest monthly drop in two years. European shares were likely to tread lower, with spreadbetters predicting major European markets    would open down as much as 0.2%. US stock futures were nearly unchanged.   "The situation in Spain at the moment is untenable, not only is there concern over the state of its banking sector but there is little confidence its government will actually be able to bail them out,” said Michael Creed, an economist at the National Australia Bank. A caution by Spain’s central banker that Madrid will miss deficit targets for this year pushed Spanish 10-year yields  above 6.7%, close to 7%, a level seen as unsustainable and which could push Spain to seek a bailout just as Greece, Portugal and Ireland have done. The cost of insuring against a Spanish default scaled a record high near 600 basis points while Italy, which is also struggling with huge public debt, saw its 10-year yield  top 6% for the first time since January. Yields on all German bond maturities hit record lows on Wednesday, pushing the premium investors demand to hold Spanish debt over German debt to its highest since the launch of the euro at around 543 basis points. Firm dollar slams commodities Oil prices extended losses and copper hit 2012 lows near $7 422 a tonne on Thursday. US crude futures eased 0.3% at $87.59 a barrel and were set for their worst month since late 2008. Brent crude fell 0.3% at $103.15 a barrel, on track for its worst month in two years.     “Investors were already exposed to the problems in Spain, but what really disturbed the market were oil prices and US bond yields which broke out of range to hit long-period lows,” said Lee Seung-wook, an analyst at Kiwoom Securities. The dollar index, measured against a basket of major currencies, extended its rally to 83.11, its highest since September 2010.   The strong dollar and intensifying risk aversion sent the Thomson Reuters-Jefferies CRB index, a global benchmark for commodities, tumbling 1.7% to its lowest levels since September 2010 on Wednesday. A stronger dollar typically weighs on dollar-based commodities. The dollar index was on the verge of closing above its 100-month moving average at 81.82, which would generate a buy signal which in turn could spur a sustained period of dollar strength for the next couple of years to as high as 101.00-106.00, some analysts said. The index has in the past 30 years generated four successful buy signals which have resulted in significant dollar moves, they added.Euro under fire     The euro fell to a 23-month low of $1.2358 and a four-and-a-half month low against the safe-haven yen at ¥97.36. “There is no exit in sight currently for the euro to get out of this downtrend because there is no shortage of negative news,” said Hisamitsu Hara, chief FX manager at Bank of Tokyo-Mitsubishi UFJ. “Problems in Spain, a large eurozone economy, heighten fears while the risk of Greece leaving the euro bloc raises contagion concerns. The euro remains depressed, with players  cautiously testing the downside”. Hara added that the euro could weaken until support at the$1.19 level. The euro last dipped below $1.19 in June 2010. The yen rose to a three-and-a-half month high against the dollar at ¥78.71. Hara said wariness over Japanese authorities intervening to prop up the dollar was likely to prevent the US currency from falling sharply further.The European Commission threw Spain two potential lifelines, offering more time to reduce its budget deficit and offering direct aid from a eurozone rescue fund to recapitalise distressed banks. But any relief from the news was quickly offset by the latest Greece polls showing parties for and against a bailout neck-and-neck or very close to each another, ahead of a June 17 election that may decide whether Greece remains in the euro. Asian credit markets weakened, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 8 basis points.  

Oil prices extend losses

 

 Oil extended losses in Asian trade on Thursday, with prices hitting multi-month lows as Spain's banking woes intensified worries about the eurozone, analysts said.New York's main contract, West Texas Intermediate crude for delivery in July was down nine cents to $87.73 per barrel while Brent North Sea crude for July shed 29c to $103.18 in the afternoon.Prices had slumped Wednesday as the dollar rose to two-year highs against the European single currency, making dollar-priced oil more expensive and hurting demand.WTI crude had plunged $2.94 on Wednesday to its lowest level since October, while Brent declined $3.21, its lowest close since December 16."Right now, the market is wide open. There is still scope for more downside pressure on prices if the bearish sentiment about the eurozone's future keeps up," said Nick Trevethan, senior commodities strategist at ANZ Research.Spain's economic woes were sharply in focus as its 10-year borrowing rates approached the 7% mark considered too high for governments to be able to service their debts.Economists fear Madrid will have to seek an international bailout - following Greece, Ireland and Portugal - despite assurances from Prime Minister Mariano Rajoy.The European Commission weighed in on Wednesday, placing the debt-wracked country at the head of a critical list of 12 economies ordered to carry out sweeping reforms this year to try to stabilise the eurozone debt crisis."Concerns about a possible Greek exit and the risks of contagion from the periphery remain and in the absence of a policy response, oil prices are likely to remain under pressure," said Barclays Capital in a commentary.

NEWS,19.05.2012

Europe's economic woes dominate G8 gathering

 

US President Barack Obama will press European leaders to ease up on fiscal austerity and focus on economic growth at a summit that will discuss ways to stem turmoil in the euro zone and head off the risk of global contagion.At the wooded Camp David retreat in Maryland's Catoctin Mountains, Obama and leaders from other large economic powers will try to forge a common approach to tackling a crisis that threatens the future of Europe's 17-nation single currency.Though no major policy decisions are expected from the Group of Eight summit, leaders hope they can bridge enough of their differences to soothe rattled financial markets after worries about the risk of a Greek exit from the euro zone sent European stock prices to their lowest level since December."Hopefully we'll get some stuff done," Obama told Italian Prime Minister Mario Monti as he and other summit participants arrived for Friday evening dinner at a lodge at the secluded presidential retreat.Obama earlier in the day aligned himself with Monti and new French President Francois Hollande by urging a solution to the euro zone crisis that combines fiscal belt-tightening measures with a "strong growth agenda."On the other side of the debate is German Chancellor Angela Merkel, who has pushed fiscal austerity as a means of bringing down huge debt levels that are burdening European economies.Voters in euro zone countries have shown frustration with that approach, ejecting governments such as that of Nicolas Sarkozy, who was defeated by Hollande, a socialist, in the May 6 French presidential election.A draft of the summit communique shown to Reuters will stress an "imperative to create growth and jobs."Also on the summit agenda are concerns about oil and food prices as well as Afghanistan, Iran, Syria and North Korea.Speculation has grown that Obama will use an energy session at the G8 to seek support to tap emergency oil reserves before a European Union embargo of Iranian crude takes effect in July.But with oil prices already sliding, a move by Obama to tap the Strategic Petroleum Reserve - alone or along with other countries - could expose him to criticism that the emergency supply should only be touched in a supply crisis.The Camp David summit kicked off four days of intensive diplomacy that will test leaders' ability to quell unease over the threat of another financial meltdown as well as plans to wind down the unpopular war in Afghanistan.After the Camp David talks wrap up late on Saturday afternoon, Obama will fly to his home town of Chicago where he will host a two-day NATO meeting at which the Afghanistan war will be the central topic.

 

EU, ECB working on Greece exit plans

 

The European Commission (EC) and the European Central Bank (ECB) are working on an emergency scenario in case Greece has to leave the eurozone, EU trade commissioner Karel De Gucht said in an interview published on Friday. The comments would appear to be the first time that an EU official has confirmed the existence of contingencies being taken for a possible Greek exit from the currency bloc. Speculation has been rife about such plans, but their existence has not been confirmed. "A year-and- a-half ago there may have been the danger of a domino effect," he said in an interview with the Belgium's Dutch-language newspaper De Standaard. "But today there are, both within the European Central Bank and the European Commission, services that are working on emergency scenarios in case Greece doesn't make it."He added: "A Greek exit does not mean the end of the euro, as some claim."” The source close to De Gucht said the commissioner was explaining that EU institutions had not been sitting on their hands for the past two years, and that they were now better prepared than they had been. Concern has grown that Greece may decide to leave or be forced out of the 17-country currency bloc after a rise in popular opposition to an EU-International Monetary Fund programme of fiscal austerity and structural reforms undermined attempts to form a government after May 6 elections. Greeks are scheduled to go the polls again on June 17. A victory by the far-left, anti-bailout coalition SYRIZA - which some opinion polls suggest is likely - would increase the possibility of the country leaving the euro. However, one opinion poll on Thursday showed the pro-bailout New Democracy party in first place, several points ahead of the SYRIZA, which has pledged to tear up the bailout agreement. The prospect of SYRIZA winning the election has sent the euro and markets across the continent tumbling this week. Earlier this week, the country's president said Greeks had withdrawn up to €800m from banks as the political uncertainty deepened. In a further blow, the ECB said it had halted liquidity operations with some Greek banks because their capital was too depleted. De Gucht told De Standaard he thought Greece would stay inside the eurozone, but that the crucial question until the next election was what conditions the ECB would set for guaranteeing the liquidity of Greek banks. "The endgame has begun, and how it will finish I do not know," he said. "The question is, can everyone maintain their sangfroid over the coming weeks." Asked earlier this week about any contingency planning for a Greek exit, the spokesperson for the EC replied: "There are many, many questions arising and many questions open about Greece and most answers have to come from Greece and we have to respect the ongoing political process. "Clearly, the future of Greece is in the eurozone. We are working on that."

NEWS,02.03.2012.

Sufficient oil in world to crimp Iranian supply FOR US

Global oil producers appear to have enough spare capacity to make up for Iranian exports curtailed by tough new sanctions, according to US Energy Secretary Steven Chu.Chu said it was important that sanctions be used to crimp Iranian oil sales to ensure Tehran does not develop nuclear weapons, despite the release of an Energy Information Administration report this week that showed supplies are tight.” There is spare capacity and we believe - we'll see - but I think there is sufficient spare capacity," Chu told reporters on Capitol Hill, noting that the administration will do whatever it can to help stabilise oil prices, including looking at tapping strategic reserves.” It would be very destabilising; I think everybody would agree, if Iran developed nuclear weapons. We're trying to convince Iran in its best interests not to go in that direction," he said.The final determination on whether there is enough spare capacity is up to President Barack Obama, who will announce it to Congress by the end of the month.Chu's confidence in supplies speaks to the "tough balancing act" faced by the Obama administration as it implements the sanctions, said Suzanne Maloney, a former

State Department adviser and now a senior fellow at the Brookings Institution. The administration must show it intends to crack down as a deterrent to countries that buy Iranian oil and "unnerve Tehran's confidence in its ability to ride out these pressures," Maloney said. Iran maintains its nuclear program is for peaceful purposes and denies it is trying to build nuclear weapons.Obama must also fend off any ideas in an election year that he is anything but tough on Iran, said David Pumphrey, an analyst at the Center for Strategic and International Studies.”‘ We think we are capable, in effect, of seeing this through' - that's how I would read the messaging," said Pumphrey, a former Energy Department official. In a report that is part of the new sanctions law, the Energy Information Administration (EIA), an independent arm of the US Energy Department, found that Saudi Arabia has been pumping more oil.Saudi Arabia, which has the world's biggest spare oil capacity, has produced an average of 9.7 million barrels per day over the last two months, up 600,000 bpd from the same period last year, the EIA said. But the EIA also said the cushion provided by that spare capacity was modest by historical standards: 2.5 million barrels per day, compared with an average of 3.7 million bpd a year ago. That cushion is about equal to total shipments from Iran, the world's third-largest oil exporter. Relying on the spare capacity "will require everything to work almost flat out, and hoping that additional capacity can come online smoothly," said Sarah Emerson at Energy Security Analysis Inc in Boston."I think we need to expect some hiccups along the way.” US sanctions on foreign banks that handle Iranian oil payments begin to take effect in June. But Obama, under a law he signed late last year, can offer exemptions to countries that show they have "significantly" cut their purchases from Iran."We still don't have a definition of significant yet. It's a bit of 'the eye of the beholder,'" Pumphrey said.There is strong political pressure from Congress to push ahead. Senator Joe Lieberman, an independent, said the EIA report was a "green light" to implement aggressively the energy sanctions.” With sufficient spare capacity among global oil producers, there is no excuse for countries and companies around the world not to curtail their purchases of Iranian crude, and thus deny the Iranian regime the financial lifeblood it needs for its illicit nuclear activities," Lieberman said in a statement.Obama faces mounting political fire for high gasoline prices, which are due in part to tensions in the Middle East.Chu told lawmakers at a hearing on Thursday that the administration is doing what it can to ease the sting of high prices on consumers and businesses. Some Democrats have urged the administration to release oil from its Strategic Petroleum Reserves, but Chu declined to comment on how or whether the new analysis from the EIA would affect that decision.” The president will use whatever tools he has to do what we have to do. We have the SPR option on the table," Chu told reporters. US House of Representatives Speaker John Boehner said Obama does not seem to support a release as a way to curb rising gasoline prices. Republican Senator Lisa Murkowski said the reserves, stored in huge salt caverns, should be saved for real supply emergencies rather than to try to ease prices.” I understand that tightness in world oil markets and the pressing need for sanctions on Iran leave you in a difficult position," said Murkowski, the top Republican on the Senate Energy Committee.” It is critical that we fully enforce our sanctions regime and preserve our strategic stockpiles until we really need them," she wrote to Obama.

BREAKING NEWS,19.02.2012.

Iran halts oil sales to Britain, France

 President of Iran Mahmoud Ahmadinejad speaking on TV 

Iran has stopped selling crude to British and French companies, the oil ministry said today, in a retaliatory measure against fresh EU sanctions on the Islamic state's lifeblood, oil.” Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website. The European Union in January decided to stop importing crude from Iran from July 1 over its disputed nuclear programme, which the West says is aimed at building bombs. Iran denies this. Iran’s oil minister said on February 4 the Islamic state would cut its oil exports to "some" European countries. The European Commission said last week the bloc would not be short of oil if Iran stopped crude exports, as they have enough in stock to meet their needs for around 120 days. Industry sources told Reuters on February 16 Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent in March by more than a third - or over 300,000 barrels daily. France’s Total has already stopped buying Iran's crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell has scaled back sharply. Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption. Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum along with Spain's Cepsa and Repsol were curbing imports from Iran.Iran was supplying more than 700,000 barrels per day (bpd) to the EU plus Turkey in 2011, industry sources said. By the start of this year imports had sunk to about 650,000 bpd as some customers cut back in anticipation of an EU ban. Saudi Arabia says it is prepared to supply extra oil either by topping up existing term contracts or by making rare spot market sales. Iran has criticised Riyadh for the offer. Iran said the cut will have no impact on its crude sales, warning any sanctions on its oil will raise international crude prices. Brent crude oil prices were up $1 a barrel to $118.35 shortly after Iran's state media announced last week Tehran had cut oil exports to six European states. The report was denied shortly afterwards by Iranian officials."We have our own customers ... The replacements for these companies have been considered by Iran," Nikzad said. EU's new sanctions includes a range of extra restrictions on Iran that went well beyond UN sanctions agreed last month and included a ban on dealing with Iranian banks and insurance companies and steps to prevent investment in Tehran's lucrative oil and gas sector, including refining. The mounting sanctions are aimed at putting financial pressure on the world's fifth largest crude oil exporter, which has little refining capacity and has to import about 40% of its gasoline needs for its domestic consumption.

NEWS,16.02.2012.

Crude oil hits six-month high

Oil drilling rig 

Brent crude rose today for a fourth day in a row, topping $120 a barrel - a six-month high - on worries about supply from Iran and from the North Sea, where output was expected to dip next month. A reversal of the euros losses on the day against the dollar also bolstered crude oil gains on both sides of the Atlantic. The euro surged back after reports that euro zone central banks had agreed to exchange Greek bonds they hold for new bonds as part of a deal to help the debt-strapped country. This raised fresh hopes that Greece's a long-sought debt bailout would be agreed by next week. US crude erased an early $1 decline and rose to a six-week high as upbeat data on jobless claims and housing brightened the outlook for domestic energy demand. The US data also helped lift Brent. US gasoline futures rose to their highest level in 5-1/2 months, at $3.0514 a gallon, for front-month March RBOB , up 1.5 % on the day, adding support to crude. A lower-than-expected gasoline stock build for last week shown in government inventory data released on Wednesday helped boost gasoline futures.In London, ICE Brent April crude was up 97 cents at $119.90 a barrel. Brent hit a session high of $120.38, the highest since an intraday high of $120.40 on August 1.In euro terms, Brent prices were the highest since 2008.US March crude was up 57 cents at $102.37, having fallen earlier to $100.84. It hit a session high of $102.69, the highest since January 12's high of $102.98."Crude futures popped on the euro reversal to the upside against the dollar and the S&P 500 also rose," said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Connecticut.” US crude, though lagging Brent's gains, is having a good run, considering where it was just days ago and with a lot of fundamental headwinds against it," he added. The spread's widening followed US government data on Wednesday showing a 2 million-barrel increase in stockpiles last week at the US delivery point in Cushing, Oklahoma. Supplies at the hub rose to the highest level since September and the gain was the biggest weekly rise since December 2009.Initial US claims for unemployment benefits unexpectedly fell last week to near a four-year low, suggesting the labour market recovery was gaining steam, and housing starts rose more than expected in January. Iran’s ambassador to Russia said plans to cut off supplies of Iranian crude to Europe would benefit only the Islamic republic, which in the past has been heavily dependent on imported fuel due to restricted refining capacity. In another front, Iran, the world's fifth-largest oil exporter, proposed an early resumption of long-stalled nuclear talks with world powers, according to a letter from Tehran to European Union policy chief Catherine Ashton.On Wednesday, oil prices jumped early after Iranian state television reported that the country was halting its crude exports to six European countries before the EU ban on Iranian crude takes effect in July. This was later denied by Iran's oil ministry, helping pare session gains. Crude oil output from the North Sea, home of the global Brent benchmark, is set to fall in March for a third month due to maintenance work and natural aging of oilfields there.Supply will average 2.18 million barrels per day in March, down 1.4 % from 2.12 million bpd the previous month, data compiled showed on Tuesday.

NEWS,05.02.2012.

Iran launches new exercises

Iran has begun ground military exercises and defiantly warned that it could cut off oil exports to "hostile" European nations as tensions rise over suggestions that military strikes are an increasing possibility if sanctions fail to rein in the Islamic Republic's nuclear program. Tehran has stepped up its rhetoric as international pressure mounts over allegations that it is seeking to develop atomic weapons, a charge it denies. Iran's Supreme Leader Ayatollah Ali Khamenei has issued stern warnings against any possible US or Israeli attacks against Tehran's nuclear facilities. Western forces also have boosted their naval presence in the Gulf led by the American aircraft carrier USS Abraham Lincoln. The new military manoeuvres came weeks after Iran rolled out its troops and arsenals in an unprecedented display of military readiness, with 10 days of naval manoeuvres that included the first threats to block Gulf oil tankers in early January. Ground forces also were sent on winter war games - against what a Tehran military spokesman called a "hypothetical enemy" - with US forces just over the border in Afghanistan. Plans for new Iranian naval games in the Persian Gulf off the country's southern coast have been in the works for weeks. Iranian state media reported the ground manoeuvres of the elite Revolutionary Guard started Saturday near Jiroft, 745 miles (1200 kms) south of the capital Tehran. No more details were available, but it appeared that they were small-scale exercises and not linked to the planned major naval manoeuvres near the Strait of Hormuz, the route for one-fifth of the world's crude oil. Iranian officials and lawmakers repeatedly have threatened to close the strait, which funnels down to a waterway no wider than 30 miles (50 kms) at the mouth of the Gulf, in retaliation for sanctions that affect Iran's oil exports. But they have as yet made no attempts to disrupt shipping through the waterway, and the US and other Western powers have warned they would respond swiftly to any attempts at a blockade. Washington and its allies fear Iran could use its uranium enrichment labs - which make nuclear fuel - to eventually produce weapons-grade material. Tehran insists it only seeks reactors for energy and medical research. So far, the West is relying primarily on the threat of economic sanctions to pressure Iran over its nuclear program. Tehran has claimed that the most recent move - EU sanctions approved on January 23, which include an oil embargo and the freezing of central bank assets - will be ineffective, while members of Iran's parliament say they have drafted a bill which would cut off the flow to Europe early, before it can find alternative suppliers. Iran's Oil Minister Rostam Qassemi also said on Saturday (local time) the Islamic Republic would "definitely" cut off oil to "hostile" European countries, without specifying which ones they were. However, he said Iran is moving toward reducing reliance on oil revenues, a hint that Tehran is preparing for the worst. Oil sales account for about 80 per cent of Iran's foreign revenues. Qassemi, the oil minister, reiterated Iran's argument that the EU oil embargo will not cripple Iran's economy, claiming that the country already has identified new customers to replace the loss in European sales that accounted for about 18 per cent of Iran's exports. "We've made the necessary planning to deal with that. We have friends in the world and will assist each other," he said. "We won't back down a single step under political pressures and won't give up our right position even if we can't sell a single barrel of oil." In contrast, he said, the ban would rebound on oil consumers. "If Iran's oil is totally deleted from the market, then a terrible tension will be created. The costs will be intolerable. The option of imposing a total ban on Iran's crude exports is unenforceable," he said. Qassemi also reinforced Iran's warning to Saudi Arabia and other fellow OPEC members against boosting production to offset any potential drop in Tehran's crude exports, saying the cartel should not be used as a political weapon against a member state.

Israel, for its part, has so far publicly backed the efforts by the US and European Union for tougher sanctions that target Iran's oil exports. But Israeli leaders have urged even harsher measures and warn that military action remains a clear option despite Western appeals to allow time for the economic pressures and isolation to bear down on Iran. Khamenei, in a nationally broadcast speech on Friday, staked out a hard line after suggestions by Israel that military strikes are an increasing possibility if sanctions fail to rein in Iran's nuclear program. He pledged to aid any nation or group that challenges Israel and said any military strikes would damage US interests in the Middle East "10 times" more than they would hurt Iran. The comments also may signal that Tehran's proxy forces - led by Lebanon's Islamic militant group Hezbollah - could be given the green light to revive attacks on Israel as the showdown between the rivals intensifies.

NEWS,29.01.2012.

EU could face long-term oil ban from Iran

Iran is considering banning all oil exports to the European Union (EU) for five to 15 years, a senior Iranian lawmaker was quoted as saying, while its deputy oil minister said prices would surge if the EU stopped importing Iranian crude. Iranian lawmakers had been expected to debate a bill today to ban exports of Iranian crude to Europe in a move calculated to hit ailing European economies before an EU-wide ban on any Iranian oil comes into effect in July.Emad Hosseini, a member of Iran's Energy Commission, told the semi-official Mehr news agency no draft bill had been drawn up but that lawmakers were considering a preemptive ban on oil exports to the EU, while a member of Iran's National Security and Foreign Policy Commission said any ban would last at least five years."We will change the threat into an opportunity for Iran and cut Iran's oil supplies to the Europeans for five to 15 years," Mohammad Karim Abedi was quoted as saying by the semi-official Fars news agency today.” We will not leave enemies' sanctions unanswered and we will impose other sanctions on them in addition to closing Iran's oil supplies to Europe.

"EU imports of Iranian crude rose to about 700,000 bpd in the third quarter Last year, up more than 7% from the second quarter, with some of Europe's most fragile economies among the biggest buyers.” Banning oil imports from the Islamic Republic of Iran, but delaying the implementation of this ban for six months indicates Europe's fear," the Vice-Chairman of the parliament's National Security and Foreign Policy Commission, Hossein Ebrahimi, told Fars.Escalating tensions between Iran and Western allies over Tehran's nuclear programme, particularly Iranian threats to close the vital Straits of Hormuz Gulf oil export route, have helped push up Brent crude prices by about $15a barrel since mid December. Benchmark Brent crude prices rose to around $150,00 a barrel on Friday on expectations Iran's parliament could vote to halt exports to the EU next week and Iran's deputy oil minister said on Sunday oil prices could hit $182 a barrel because of the EU ban.” Although a precise prediction cannot be made on oil prices, it seems we will witness a $120  to $150 oil price per barrel in future," Ahmad Qalebani was quoted by the official IRNA news agency as saying. But analysts say the world is likely to have more oil this summer - thanks to additional output from Saudi Arabia, Iraq and Libya that will make up for any lost from Iran under the EU ban - which could weigh on oil prices.At the same time, demand for cheap Iranian oil from China and other Asian countries that do not back Western sanctions may mean world oil flows are merely diverted rather than cut, although some of Europe's shakiest economies may have to pay more for alternative supplies. China and India have made clear they are keen to soak up any spare Iranian oil, even as US Treasury measures to choke Tehran's dollar trade make it harder to pay for supplies.Qalebani said Iran would have no problem selling any oil it does not export to Europe and that India would remain a good customer of Iranian oil despite running up debts of $9.7 billion dollars due to US efforts to block oil payments to Tehran. Europe and the United States hope that tougher sanctions aimed at starving Iran of oil revenues can force Tehran to stop a nuclear development programme that Iran says is purely for energy purposes but which the Western allies suspect includes a weapons programme. It is now unclear when Iranian lawmakers will vote on Iran's response to the January 23 decision by the 27 EU member states to stop all their imports of Iranian oil from July 1.Hosseini said any proposal would first have to be discussed by the Energy Commission and then other key government officials before being submitted to parliament for approval.

NEWS,24.01.2012

U.S. lauds EU for embargo on Iranian crude oil

Move could spur rise in gas prices

U.S. leaders praised the European Union’s embargo on Iranian oil Monday, even though it triggered a jump of more than $1 per barrel in global oil prices and signaled the potential for a rise in U.S. gasoline prices in the weeks ahead. Iranian officials called the embargo an act of “psychological warfare,” and lawmakers renewed threats to block the Persian Gulf’s Strait of Hormuz, through which one-fifth of the world’s crude oil is transported. The EU’s move showed significant widening of international support for the U.S.-led effort to choke off the Iranian economy to pressure Iranian leaders to abandon a nuclear program that the Islamic republic claims is peaceful. Western nations and Israel fear Iran is trying to make an atomic weapon. By agreeing to the oil embargo, the EU’s 27 foreign ministers delivered “another strong step in the international effort to dramatically increase the pressure on Iran,” 

Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner said in a joint statement. With EU nations buying about 25 percent of the 2.5 million barrels exported by Iran daily, analysts say the embargo’s impact will be felt on both sides, especially among EU members already struggling under austerity measures tied to the Continent’s economic crisis. Iran remains the second-largest producer in the Organization of Petroleum Exporting Countries (OPEC), and the embargo’s ultimate impact on global oil prices remains to be seen. President Obama authorized new sanctions on Iran’s oil sector and the central bank when he signed the Defense Authorization Act on Dec. 31. However, implementation of those sanctions was delayed for six months to prevent a sudden increase in global oil prices. News of the EU’s move Monday sent the New York stock market price of crude oil to $99.58 per barrel, an increase of $1.25 from Friday. A joint statement issued by the leaders of the EU’s most powerful nations said that while “the door is open to Iran to engage in serious and meaningful negotiations,” Iranian leaders have “failed to restore international confidence in the exclusively peaceful nature of its nuclear program.” Until Iran comes to the table, we will be united behind strong measures,” said the statement by British 

Prime Minister David Cameron, German Chancellor Angela Merkel and French President Nicolas Sarkozy.Mrs. Clinton and Mr. Geithner noted that the EU embargo bolsters the new U.S. sanctions with the goal of “targeting transactions with the Central Bank of Iran and by providing strong incentives to reduce Iran’s ability to earn revenue from its oil exports.” The stakes are high for such measures because a further jump in oil prices could threaten the EU’s delicate economic recovery.In the U.S.,average gasoline prices have hovered at $3.85 per gallon this month. Analysts say that gradual increases in the cost of crude take about a week to impact prices at the pump. The oil embargo’s overall impact on global crude prices may be more difficult to calculate.” At this point, there’s at least some short-term confidence that there’s an excess in the market to absorb any disruptions in Iranian supply, but there’s a lot of uncertainty and ultimately the key player will be China,” said Suzanne Maloney, a senior foreign policy fellow focused on Persian Gulf and Middle East energy policy at the Brookings Institution.