16 January 2012 11:01 [Source: ICIS news]
SINGAPORE (ICIS)--Brent crude futures gained more than $1/bbl on Monday following warnings from Iran that Gulf producers should not raise output in order to meet increased demand as buyers attempt to cut Iranian imports amid concerns over sanctions.
At 10:00 GMT, February Brent crude on London’s ICE futures exchange was trading at $111.28/bbl, up by 84 cents/bbl from the previous close. Earlier, the North Sea benchmark rose to a session high of $111.67/bbl, up by $1.23/bbl.
February NYMEX light sweet crude futures (WTI) were trading at $99.38/bbl, up by 68 cents/bbl on the previous close. Earlier the US benchmark rose to a session high of $99.48/bbl, up by 78 cents/bbl from the previous close.
Iran’s OPEC minister, Mohammad Ali Khatibi, told an Iranian newspaper that Tehran’s Arab neighbours should not cooperate with the US and western powers in their moves to impose sanctions on Iranian oil exports.
The Iranian warnings followed comments made on 14 January by Saudi Arabian oil minister Ali al-Naimi that the Kingdom, which is the world’s largest oil exporter, would meet any increase in demand. The minister did not directly link any move to sanctions on fellow OPEC member Iran.
Major buyers of Iranian crude in Asia, which include China, Japan and South Korea, have been attempting to reduce imports and diversify their crude purchases amid pressure from the US to impose sanctions on Iranian oil exports.
China is the largest importer of Iranian crude, purchasing more than half a million barrels per day or around 11% of its total imports. Iranian crude imports by Japan and South Korea total around 10% of total crude imports for both nations.
The US and other western nations have tightened sanctions on Iran amid heightened tensions over Tehran’s nuclear programme, which they fear is linked to the development of nuclear weapons.
Iran is the second-largest producer in OPEC and the world’s fourth-largest oil producer, with an output of around 3.55m bbl/day. The nation is the third-largest oil exporter, according to data from the International Energy Agency (IEA).
Iran has threatened to halt oil shipments travelling through the strategically important Strait of Hormuz if sanctions are imposed on its oil exports. Oil exports from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Iran are shipped through the Strait of Hormuz.
The EU is scheduled to hold a meeting on 23 January to discuss the implementation of an embargo on Iranian oil imports. Some EU nations, including Greece and Italy, which import sizeable volumes of crude from Iran, have been seeking a delay in the imposition of an embargo.
China has reacted angrily to US moves announced last week to impose sanctions on Zhuhai Zhenrong Corp, a Chinese state-owned trader, which is understood to be the leading exporter of refined petroleum products to Iran.
Oil markets have recovered after losing ground on Friday after Standard & Poor’s downgraded credit ratings for several eurozone nations, including France.
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