Brent oil trading at $111 on Middle East and EU debt tensions

Brent oil prices open today’s trading session at $111 a barrel after the European Union signaled it may ban imports from Iran, while EU leaders continue to wrestle with the grim debt situation that threatens the euro currency.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2012 delivery was trading at $111.28 a barrel, 08.22 GMT this morning on the ICE Futures Exchange.

Brent crude oil futures gained as much as 0.4 percent after closing at the highest level in three weeks.

EU Ban on Iran Oil

The EU may have reached an agreement to ban oil shipments from Iran, OPEC’s second-largest producer, EU Energy Commissioner Guenther Oettinger said yesterday.

Meanwhile, tension’s in the Middle East grew as Kuwait’s ruler dissolved parliament after corruption allegations sparked anti-government protests.

“Oil prices are slowly ticking up on the back of potential supply shocks. The market is still looking at what may or may not happen in terms of embargoes on Iran from the West. There’s also the potential for civil unrest in Kuwait.” said David Lennox, a resource analyst at Fat Prophets in Sydney.

Traders are closely watching whether possible sanctions imposed by Europe and the US on Iran related to its nuclear energy program will pinch global crude oil supplies.

EU Downgrade Threat

Markets are viewing yesterday’s eurozone downgrade threat by ratings agency Standard & Poor’s as added incentive for EU leaders to agree to sustainable treaty changes to contain the sovereign debt crisis on Friday.

Europe’s touted new debt plan would reportedly almost double the size of the region’s fund for indebted nations and include increased backing from the IMF.

But investors were likely to stay cautious ahead of Friday’s summit and a meeting of the European Central Bank to decide on the direction of interest rates.

“The market will trade cautious before the ECB rate decision and the EU summit on Friday. Investors have priced in a positive outcome at the summit, so we might see a sell off if the meeting disappoints,” said Natalie Robertson, a commodities analyst with ANZ Bank, Melbourne.

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Brent oil trading at $111 on Middle East and EU debt tensions