Crude falls on assurance that Strait of Hormuz will not close

20 March 2012 15:17  [Source: ICIS news]

LONDON (ICIS)--Crude oil futures fell by over $2.00/bbl on Tuesday after Kuwait's ruler said Iran would not close the strategically important Strait of Hormuz shipping lane, while Saudi Arabia said it is ready to increase production.

By 13:55 GMT, the front-month May ICE Brent contract fell to an intraday low of $123.20/bbl, a loss of $2.51/bbl compared with Monday's settlement. The contract subsequently edged higher to trade around $123.63/bbl. The April contract will expire later on Tuesday.

At the same time, the front-month April NYMEX contract hit an intraday low at $106.06/bbl, a loss of $2.03/bbl compared with Monday's close.

Supply concerns in the physical crude oil markets were showing signs of easing on Tuesday. According to media reports, Kuwait’s ruler, Sheikh Sabah al-Ahmed al-Sabah, has said that Iran assured Kuwait that it will not close the Strait of Hormuz shipping lane. Kuwait uses the strategic shipping lane to export its crude oil.

In addition, Saudi Arabia has said that it is ready to increase production and exports in the light of recent high prices.

Further supply concerns were also eased by news from Libya’s National Oil Corporation, which said oil exports will return to pre-war levels of around 1.4m bbl/day by April this year.

By: Kawai Wong
+44 20 8652 3214

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