Oil price hits nine-month high

February 18, 2012 | 08:28

(0) user say

Oil prices struck a nine-month high in New York Friday, driven by simmering geopolitical tensions over key crude producer Iran and optimism the Greek debt crisis can be resolved, traders said.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in March, rose 93 cents to $103.24 a barrel.

In London, Brent North Sea crude for April delivery had hit $120.70 per barrel, its highest point since June 14 before pulling back to settle at $119.58, down 53 cents from Thursday's closing level.

"Greater risk appetite in the light of hopes of financial assistance for Greece, coupled with the Iran crisis, have caused Brent to climb to an eight-month high of over $120," said Commerzbank analyst Carsten Fritsch.

"Admittedly, Iran has denied reports of an immediate ban on oil shipments to the EU, yet consumers in Europe already appear to be preparing themselves for just such an eventuality," Fritsch said.

"According to industry sources, the leading European oil companies have slashed their March oil imports from Iran by more than 300,000 barrels per day. This is prompting additional demand for alternative oil types and is thus causing prices to rise."

The market gained ground on continued tension between Western powers and Iran, as well as positive economic data from the United States, analysts said.

"Ongoing Iranian tensions and the threat of disruption to oil supplies continue to be the main driver in the oil price," said VTB Capital economist Neil MacKinnon.

"In addition, better US economic data and improving risk appetite in the equities market also provides support."

Meanwhile, traders were also closely watching the situation in the North Sea, where output is set to fall for a third month in March due to maintenance work.

AFP

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional