WTI oil price closes week near $104 a barrel could hurt US economic recovery

The price of US WTI crude oil ends the week near $104 a barrel and could hurt the US economic recovery as tensions over Iran’s oil supply ban to Europe fuel oil prices, whilst gathering strength in the American economy could push oil demand higher as the summer draws closer.

WTI Oil – Closing Price

US Light crude oil futures for March 2012 delivery closed the weeks session at $103.91 a barrel on the NYMEX, or 1.3 percent higher on the day. The March US oil futures contract expired yesterday.

Cost of US Crude Oil

The cost of US crude oil has been rising steadily since hitting a seasonal low in October, gaining upward momentum on escalating tensions with Iran after a series of moves by the US and the EU to pressure Tehran to shut down a uranium enrichment program aimed at producing nuclear weapons.

Tensions over Iran’s recent ban on oil exports to several EU members states, together with the potential for major supply problems if the Strait of Hormuz sees any closure is driving up the cost of oil futures for both Brent and WTI oil.

“The Iranians have a lot at their disposal to upset this market, whether by embargoing the EU or even just creating some mischief. They don’t even have to block the Strait of Hormuz, they just need to sink a ship, lay some mines and be disruptive.” said oil industry analyst John Kilduff.

Brent Oil Price and Iran

In London, Brent North Sea crude for April delivery had hit $120.70 per barrel, its highest point since June 14th before pulling back to settle at $119.58 a barrel at close yesterday, down 53 cents from Thursday’s price.

“Greater risk appetite in the light of hopes of financial assistance for Greece, coupled with the Iran crisis, have caused the price of Brent crude oil to climb to an eight month high of over $120. Admittedly, Iran has denied reports of an immediate ban on oil shipments to the EU, yet consumers in Europe already appear to be preparing themselves for just such an eventuality.” said Commerzbank analyst Carsten Fritsch.

What’s Behind the Oil Price Rises?

According to industry sources, the leading European oil companies have slashed their March oil imports from Iran by more than 300,000 barrels per day. This is prompting additional demand for alternative oil types and is thus causing oil prices to rise.

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WTI oil price closes week near $104 a barrel could hurt US economic recovery