By Konstantin Rozhnov
International talks early next year over Iran’s nuclear program will probably renew focus on the issue and bolster a risk premium in oil prices, according to Societe Generale SA.
The U.S. is trying to bring Iran back to the negotiating table in the first quarter, before Israel’s alleged deadline for a resolution or military confrontation with Iran in the late spring or summer, Michael Wittner, the New York-based head of commodities research for the bank, said in an e-mailed note.
“We would expect the nuclear issue to be taken up by the UN Security Council once again, with the U.S. and Europeans pushing for some sort of ultimatum,” Wittner said. “That would trigger a sustained increase in the geopolitical risk premium.”
The price of benchmark Brent crude rallied as high as $128.40 a barrel on March 1, the most since 2008, driven partly by concern that forthcoming sanctions on Iran might prompt the nation to blockade the Hormuz Strait, a key oil-export route. Brent traded at $109.50 a barrel at 11:08 a.m. London time today. Societe Generale reiterated its forecast for Brent to average $110 a barrel in the first quarter of 2013.
Iran’s Islamic Revolution Guards Corps plans to stage a military drill in the strait by March 20 next year, state-run Press TV said on its website earlier this week, citing Navy Commander Rear Admiral Ali Fadavi.
International Atomic Energy Agency inspectors expect to complete an agreement on Jan. 16 in Tehran that would give them wider access to suspected Iranian nuclear facilities, Herman Nackaerts, deputy director of the United Nations nuclear watchdog, said in Vienna on Dec. 14. The relationship between Iran and the agency has grown increasingly acrimonious this year after Iranian officials accused the IAEA of spying for Western powers. Iran denies it is trying to make atomic weapons, saying its nuclear research is for civilian use only.