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OIL FUTURES: Crude Oil Spikes On Iranian Tensions

Posted by Zand-Bon on Nov 30th, 2009 and filed under Oil & Gas, Sections. You can follow any responses to this entry through the RSS 2.0. Responses are currently closed, but you can trackback from your own site.

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By Claire Rangel

November 30, 2009

Source:

NEW YORK (Dow Jones)–Crude futures jumped sharply Monday on concerns over tensions with Iran after reports that United Kingdom nationals were being held in Iran after their yacht was seized.

Light, sweet crude for January delivery recently traded $1.54, or 2.1%, higher at $77.59 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.67, or 2.2%, higher at $78.85 a barrel.

Oil prices spiked after reports that five U.K. nationals were being held after the Iranian navy seized their yacht, which may have strayed into Iranian waters in the Gulf en route from Bahrain to Dubai, the British Foreign Office said. The AFP reported the incident occurred Nov. 25.

Tensions between Iran and western countries were already simmering after Iran pledged over the weekend to build 10 uranium-enrichment plants, despite being under pressure by Western nations to accept a nuclear-energy deal negotiated last month with the International Atomic Energy Agency.

Iran last week also launched a five-day military air-defense exercise, exerting its military might.

“Iran tensions have been ongoing and this is a contributing factor to the spike,” said Mike Fitzpatrick of MF Global in New York. He added that fears that the Dubai debt crisis is not as disastrous as first thought is also underpinning prices.

Dubai World, the city state’s largest corporate entity, had asked Wednesday for a six-month stay on the repayment of its debts, and worries this would derail the economic recovery caused oil prices to slump briefly to a six-week low Friday. The move in prices was even more pronounced due to the Thanksgiving holiday in the U.S. Thursday that resulted in a low level of trading liquidity.

But the United Arab Emirates over the weekend announced that it would offer liquidity to local and international lenders following last week’s concerns about Dubai World’s debt, after credit fears spooked global commodity and equity markets.

Front-month December reformulated gasoline blendstock, or RBOB, recently traded 7.48 cents, or 3.9%, higher at $2.0010 a gallon.

December heating oil recently traded 6.03 cents, or 3.1%, higher at $2.0225 a gallon.

-By Claire Rangel, Dow Jones Newswires; 212-416-2846; .

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