Brent oil price holds near $109, Iran sanctions could push the contract higher

Brent oil futures open Tuesday’s trading session near $109 a barrel after closing higher on Monday in line with stock markets around the world, however it could be problems surrounding the latest sanctions over Iran that pushes oil prices higher in the short term.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2012 delivery was trading at $109.01, 08.30 GMT this morning on the ICE Futures Exchange.

Iran Sanctions – Oil Prices

Oil prices rallied after the EU signaled it will recommend additional sanctions on Iran, including a possible oil import ban, during a meeting of foreign ministers set for Thursday.

A draft of a statement that the diplomats plan to release following their meeting says the EU “agreed to broaden existing sanctions by examining additional measures” on Iran, including sanctions on the country’s energy sector.

Foreign ministers are expected to map out further measures as well, but are likely to stop short of issuing a joint call for an oil embargo, delaying definitive talks on the issue until the meeting of EU heads of state.

Experts say an oil embargo would only work if Europe can get Saudi Arabia on board to fill any gaps caused by an end to Iranian supplies.

Even so, a likely rise in Brent oil prices that are already well above $100 a barrel, resulting from a European embargo on Iran could punish Europe’s already struggling economies.

“The timing of such an embargo could hardly be worse. Relatively small disruptions could cause spikes in flat prices and term structures.” said James Zhang, commodity strategist at Standard Bank in London.

The possible sanctions are the latest escalation in tensions over Iran’s nuclear crisis. Concern over Iran’s nuclear program have taken on additional weight since the IAEA released a report earlier this month expressing worry it was exploring building a nuclear weapon.

Excerpt from:
Brent oil price holds near $109, Iran sanctions could push the contract higher