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Oil prices rise above 70 dollars in Asian hours as traders focus on Iran
AFP
SINGAPORE
Petroleumworld.com 08 31 06
Oil prices jumped above 70 dollars a barrel in Asian hours Thursday as Iran moved closer to a possible showdown with major world powers over its nuclear programme, dealers said.
At 3:10 pm (0710 GMT), New York's main contract, light sweet crude for October delivery, was up 37 cents to 70.40 US dollars a barrel from its close of 70.03 dollars in New York on Wednesday.
Brent North Sea Crude climbed 40 cents to 70.58 dollars.
Oil prices had dropped three dollars at the start of the week, falling below 70 dollars on Tuesday, mainly owing to expectations that tropical storm Ernesto would not damage US Gulf Coast oil facilities.
With the threat of Ernesto dissipating, traders refocussed their attention on how Iran will respond to a UN Security Council resolution to stop its uranium enrichment activities by August 31 or face possible sanctions.
"Clearly the market is watching the Iran issue closely," said Mark Pervan, an energy analyst for Daiwa Securities in Melbourne.
"There won't be an immediate agreement halting the nuclear enrichment but the market has factored this in and I reckon there will be a high floor price. If Iran were to comply, we would see a sharp drop in the prices."
Amid signs Iran would ignore the deadline, the United States predicted confidently that the UN security council would impose sanctions on Tehran within a month.
"I think it's abundantly clear that Iran has no intention of meeting the deadline and meeting the condition that the countries put down three months ago," US Undersecretary of State Nicholas Burns said in Washington.
"We believe the sanctions regime will be agreed to in September by the Security Council and we're going to work towards that with a great deal of energy and termination.
"There has to be an international answer and we believe there will be one," he said on CNN.
The New York Times said Thursday the United States and three European allies -- Britain, France and Germany -- are considering a three-tier system of sanctions against Iran.
The list would begin with low-impact measures including an embargo on the sale of nuclear-related materials, a freeze of overseas assets and a travel ban for Iranian officials involved in the nuclear program, said officials involved with the talks.
If that failed to persuade Iran, the measures a few weeks later would progress to a broader travel ban and freezing assets of Iranian government members, the report said.
Should Iran continue to resist compliance, the sanctions would be ratcheted up to include restrictions on commercial flights and on World Bank loans to Tehran.
Iran insists its nuclear program is for the civilian production of energy only and has repeatedly said it will not halt the program.
Analysts fear that sanctions on Iran would disrupt oil supplies from the world's fourth-largest crude producer which pumps about 4.0 million barrels of oil per day, most of which is exported.
AFP 31 0303 GMT 08 06
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