OIL & GAS MARKET WRAP

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Tuesday, February 07, 2012

Oil rises as media reports say Iran ready to ban imports to Europe

Oil rises as media reports say Iran ready to ban imports to Europe

Despite today’s sell-off in equity markets on both sides of the Atlantic, oil prices rose as fears of supply disruptions trumped concerns over the situation in Greece, where talks to agree to the terms of a €130 billion bailout dragged on.

Greece must impose further unpopular austerity measures including wage cuts in order to secure more financial aid from the EU, which is necessary to avert a default as the debt-ridden nation faces a March 20 deadline to repay a €14.4 billion bond.

Reports suggested that a tentative agreement was in place, but no firms deal has yet been agreed on.

Crude prices received support from speculation that Iran could stop exporting oil to Europe immediately in response to an oil embargo imposed by the EU last month.

The EU agreed on the embargo last month after it was reported that Iran started enriching uranium at an underground facility to protect its nuclear programme from a possible airstrike by Israel.

Europe planned to reduce dependence on Iranian oil gradually and stop importing crude from the Middle Eastern country, which is accused of illegally developing a nuclear weapon completely by July.

Iran reacted angrily, threatening to cut off oil supplies to Europe immediately and block access to the Strait of Hormuz – a major shopping route used to transport a fifth of the world’s oil.

A little over a week ago, the Iranian parliament delayed a vote on an oil ban; today, however, state media said the state is ready to halt shipments to Europe.

Such a move by Iran would force Europe to step up efforts to find oil suppliers to make up for the resulting shortfall. Europe imported 600,000 barrels of Iranian crude per day in the third quarter of 2011.

US light, sweet crude for March delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), rose 7 cents to US$96.98/barrel in morning trade in New York.

March Brent crude surged 52 cents to US$116.54/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Woburn Energy (LON:WBN), up 17.5 percent at 2.2 pence at midday

TXO (LON:TXO), up 14 percent at 0.615 pence

Nostra Terra Oil & Gas (LON:NTOG), up 12 percent at 0.465 pence

Sterling Energy (LON:SEY), up 8 percent at 41.25 pence

Amerisur Resources (LON:AMER), up 7.5 percent at 21.25 pence

The top fallers were:

Mediterranean Oil & Gas (LON:MOG), down 7.5 percent at 4.75 pence at midday

Petro Matad (LON:MATD), down 7 percent at 28.12 pence

Kea Petroleum (LON:KEA), down 6.5 percent at 6.3 pence

San Leon Energy (LON:SLE), down 5.5 percent at 10.62 pence

Caza Oil & Gas (LON:CAZA), down 5 percent at 11.85 pence


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