Oil Rises to Nine-Month High as Iran Bars Inspectors From Base
Feb. 22 (Bloomberg) -- Oil rose to a nine-month high as International Atomic Energy Agency officials were denied access to an Iranian military base and said negotiations over the country’s nuclear program “couldn’t finalize a way forward.”
Futures climbed for a fifth day after the IAEA, the United Nations’ nuclear body, said Iran, OPEC’s second-largest oil producer, refused inspectors permission to visit the Parchin base during two days of talks that ended yesterday. Crude fell 0.6 percent earlier on reports that manufacturing activity slowed in Europe and China, signs fuel demand may decline.
“We’re just watching the Iranian story play out,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “What occurs in the market will depend on the developments there.”
Crude for April delivery increased 3 cents to $106.28 a barrel on the New York Mercantile Exchange, the highest settlement since May 4. Futures have gained 14 percent in the past year.
Prices fell after the American Petroleum Institute reported oil inventories rose 3.55 million barrels to a four-month high of 341.4 million last week. The April contract dropped 23 cents to $106.02 a barrel at 4:32 p.m. in electronic trading.
Brent oil for April settlement climbed $1.24, or 1 percent, to end the session at $122.90 a barrel on the London-based ICE Futures Europe exchange. It was the highest close since May 2.
The European benchmark settled at a $16.62-a-barrel premium to New York-traded West Texas Intermediate oil. The spread was $1.21 wider than yesterday.
Israel and the U.S. have said all options are on the table in ensuring the Persian Gulf nation doesn’t acquire atomic weapons. Iran says its nuclear program is for energy.
An Iranian general, Mohammad Hejazi, said his nation would consider pre-emptive action when threatened, Fars news agency reported yesterday.
Speculation that oil supplies will be disrupted has increased as tension between Iran and Western nations escalates, David Greely, head of energy research at Goldman Sachs Group Inc. in New York, said in a report today. The bank maintained a recommendation that investors buy Brent contracts for July 2012 to take advantage of rising prices.
Iran said earlier this week that it stopped selling crude to France and Britain in a move designed to pre-empt European sanctions. The European Union on Jan. 23 agreed to ban crude imports from Iran starting July 1 to pressure the country over its nuclear program.
“The biggest driver of the market recently has been fear about Iran,” said Tom Bentz, a director with BNP Paribas Prime Brokerage Inc. in New York. “There’s anxiety about what the latest sanctions will mean and what retaliation will take place. All of this keeps prices inflated.”
Iran pumped 3.55 million barrels a day of oil in January, according to a Bloomberg News survey of oil companies, producers and analysts. Its output trailed only Saudi Arabia among members of the Organization of Petroleum Exporting Countries.