Iran General NewsOil up $1 after brief spike on Iran rumor

Oil up $1 after brief spike on Iran rumor


Reuters: Oil rose more than $1 on Wednesday, with traders still rattled by a brief $5 spike caused by a rumor, quickly dismissed by the United States, of some sort of conflict involving Iran. SINGAPORE (Reuters) – Oil rose more than $1 on Wednesday, with traders still rattled by a brief $5 spike caused by a rumor, quickly dismissed by the United States, of some sort of conflict involving Iran.

The surge to a six-month high highlighted the market’s increasing anxiety over oil supplies from the Gulf region and in particular from Iran, the world’s fourth-biggest producer, as global tensions grow over Tehran’s nuclear ambitions.

“The market has been on pins and needles with the Iran situation and as soon as the rumor mill got started things took off,” said Phil Flynn of Alaron Trading.

U.S. crude prices jumped to a more than six-month high of $68.09 a barrel in after-hours trade late on Tuesday, but quickly fell back to stand at $63.95 a barrel by 0616 GMT, up $1.02 from Tuesday.

In London, Brent crude was up $1.21 to $65.81 a barrel, extending a six-day rally that has added about 10 percent to prices, pushing them nearer the danger zone for consumer nations who fear they could stymie economic growth.

“Oil prices surging above $68 was a temporary phenomenon but it shows that the market is on high alert for geopolitical factors,” said Takeda Makoto, analyst at Bansei Securities.

“Oil prices will range between $62-$65 unless another rumor like Iran breaks.”

Oil spiked late Tuesday evening on rumors of some sort of conflict between Western forces and Iran, which has been under mounting world pressure to abandon its nuclear program.

U.S. officials knocked down any talk of military action. The rumors come just as a second U.S. aircraft carrier moves into the Gulf to carry out military exercises. Iran’s navy began a week of exercises in the Gulf last Thursday.

“We have no information at this time that indicates any incident taking place,” said White House National Security Council spokesman Gordon Johndroe.

“Navy has nothing to substantiate that report right now,” a U.S. Navy official said when asked about a market rumor that Iran may have fired on a U.S. vessel in the Gulf. “At this juncture, there is no validity to it.”


Britain’s Ministry of Defense also firmly denied a separate rumor that UK forces had been sent in to rescue 15 British military personnel who have been held in Iran since Friday, a factor that has helped push oil to its highest prices this year.

British Prime Minister Tony Blair on Tuesday warned Iran that diplomatic efforts to free the sailors and marines could give way to a “different phase” if they were not released. Iran has said it may charge them with illegally entering its waters.

So far there has been no disruption to Iran’s daily shipments of around 2.2 million barrels, but dealers are still likely to remain on high alert over regional supplies.

The United Nations imposed new sanctions on Iran at the weekend because of its nuclear program.

As nerves settle, oil traders will turn their attention to U.S. inventory data likely to show a seventh-straight week of dwindling gasoline stockpiles, stoking summer supply worries already kindled by refinery glitches.

Analysts forecast the data, due later on Wednesday, would show a 1.8 million-barrel gasoline draw for the week ending March 23, along with a 1.6 million-barrel rise in crude stocks and a 1.2 million-barrel draw in distillates, a Reuters poll showed.

In addition to U.S. refinery hiccups, a strike by workers at the French Mediterranean oil terminal Fos-Lavera, now in its 14th day, has begun to hit refinery output and also raised concerns over Europe’s ability to export fuel to the United States.

Offsetting the supportive fundamental picture, U.S. economic data painted a darkening picture, with consumer confidence weakening in March and U.S. single-family home prices registering their first annual decline in more than a decade.

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