WTI oil price holds at $100 after US passes sanctions against Iran

The prices of WTI crude oil is holding out at $100 a barrel early on Friday after the US Senate has unanimously approved economic sanctions on Iran targeting the country’s oil industry, despite warnings the move could backfire.

Latest WTI Oil Price

US Light crude oil futures for January 2012 delivery was trading at $100.57 a barrel, 07.35 GMT this morning in electronic trading on the NYMEX.

The US oil contract closed off Thursday’s trading session at $100.23, or 0.1 percent lower.

Iran Sanctions – Oil Prices

The US effort to thwart Iran’s alleged nuclear ambitions followed new EU sanctions imposed earlier on Thursday. Under the new American sanctions, drafted by Democrat Robert Menendez and Republican Mark Kirk, foreign banks that do business with Iran’s central bank would be cut off from the US financial system.

The sanctions are designed to come into effect after a six month grace period, in order to give oil markets time to factor them in.

Meanwhile, diplomats at the Iranian embassy in London must leave Britain by Friday afternoon. They were ordered to go after hundreds of Iranian protesters stormed the UK embassy in Tehran on Tuesday.

As sanctions against Iran build, the country can still export crude oil to other countries including China and Japan, whilst some EU countries including Italy, Spain and Greece still have oil contracts with Iran, which they intend to honour.

Since the recent sanctions do not involve any drop in Iran’s actual crude oil production as was the case in Libya, the effect of these sanctions on oil prices could well be very light.

Oil Price Forecast

“Even though the economic situation is worse than at the beginning of the year, the oil price will be staying at this high level. We have a dangerous possibility of a war, at the worst, so we always have to put some premium in this market.” said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo, who sees NYMEX WTI oil futures trading between $98.50 and $101.50 a barrel over the short term.

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WTI oil price holds at $100 after US passes sanctions against Iran