Crude prices surge over Iran threat.
Futures were little changed after rising yesterday for a sixth day, the longest run of advances since November 2010.
Iran's official Islamic Republic News Agency cited Vice-President Mohammad Reza Rahimi as saying the country would bar shipments through the strait if sanctions are imposed on its oil exports.
US oil inventories probably fell a third week, according to a survey before tomorrow's Energy Department report.
"Shutting down the strait militarily is the last bullet that Iran has," said Olivier Jakob, managing director at Petromatrix, a Zug, Switzerland-based researcher. "We have to express some doubt that they would do this, and at the same time lose their support from China and Russia."
Oil for February delivery was at $101.04 a barrel, down 30 cents, in electronic trading on the New York Mercantile Exchange in London.
It added 1.7 per cent to $101.34 a barrel on Tuesday, the highest settlement since November 16. Futures climbed 11 per cent this year, extending last year's advance of 15 per cent.
Brent oil for February settlement was down 83 cents, or 0.8 per cent, at $108.44 a barrel on the London-based ICE Futures Europe exchange. The European contract's premium to crude in New York was $7.40 a barrel, compared to $7.93 at Tuesday's close, the smallest differential based on settlement prices since January 20.
About 15.5 million barrels of oil a day, or a sixth of global consumption, passes through the Strait of Hormuz between Iran and Oman atthe mouth of the Gulf, according to the US Energy Department.
Iran's navy started a 10-day exercise east of the passage that involved the use of submarines, ground- to-sea missile systems and torpedoes, Press TV said on December 24.
Iran is attempting to 'distract attention' from its nuclear program by threatening to block oil shipments through the strait, Mark Toner, a State Department spokesman, said at a briefing yesterday in Washington.
More than 75 per cent of crude shipments that pass through the strait are destined for markets in Asia, particularly China, Japan, India and South Korea, according to the US Energy Department.
US stockpiles shrink
US crude stockpiles shrank by 2.5 million barrels, or 0.8 per cent, to 321.1 million last week, according to the median estimate of seven analysts polled before an Energy Department report tomorrow. That would be the lowest level since the period ended December 26, 2008. Six respondents forecast a decline and one an increase.
Oil inventories fell in December in the past five years as refiners reduced stockpiles at the year end to minimise their taxes.
Texas and Louisiana assess taxes based on the fair-market value of inventories on January 1. The US Energy Department is scheduled to release its weekly report on December 29 in Washington, a day later than usual because of the Christmas holidays.
Muscat Press and Publishing House SAOC 2011
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|Publication:||Times of Oman (Muscat, Oman)|
|Date:||Dec 29, 2011|
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