Brent oil trading around $108 as Iran oil supply questions rock crude prices

Brent oil futures open today’s trading session around $108 a barrel and crude prices look set to be rocked by questions that now surround oil sales from Iran and possible supply problems that could face the Strait of Hormuz.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2012 delivery was trading at $108.05 a barrel, 07.30 GMT this morning on the ICE Futures Exchange.

The European Contract Closed off Tuesday’s session 2.1 percent higher, at $109.14 a barrel, mainly on concerns over Iran.

Oil and Assets Freeze

The West upped the pressure on Iran to halt its nuclear programme earlier this week as the US, Canada and the UK imposed a new wave of economic sanctions against the country.

France urged further action, calling on fellow EU members, the US, Japan and other “willing countries” to stop buying Iranian oil and freeze the assets of its central bank to force the defiant nation to suspend its nuclear programme and enter negotiations.

However, a senior Iranian official said yesterday that many countries are willing to buy Iran’s oil and the Islamic Republic is not concerned about oil embargo imposed by some European countries.

“Iran did not export oil to France and its overall oil export to EU member states was meager.” Oil Ministry’s official website Shana quoted Qalebani as saying.

Apart from a decline in oil supplies, the escalation of the Iranian crisis could lead to further instability in the oil rich Middle East North Africa region.

Oil Supply – Strait of Hormuz

Meanwhile, the United Arab Emirates could soon start pumping oil via a key pipeline that will allow it to bypass the Straits of Hormuz and protect exports if Western powers resort to military action in a row over Iran’s nuclear programme.

The Abu Dhabi Crude Oil Pipeline, a 480 km pipeline with a capacity of up to 2.5 million barrels per day will allow the UAE, one of the world’s top five exporters, to boost exports from its Fujairah terminal outside the Straits and on the Gulf of Oman.

“Oil could flow through the pipeline from the end of December initially at 1 million and gradually increase to 2 million barrels per day.” an industry source with direct knowledge of the pipeline said, adding that the start up of the pipeline would ease a serious bottleneck in the Gulf.

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Brent oil trading around $108 as Iran oil supply questions rock crude prices