Brent oil price hangs near $113 ahead of January 23 EU embargo on Iran’s oil

The price of Brent crude oil futures edged lower in choppy trade on Monday as concerns over Iran’s threat to shut the key Strait of Hormuz may come to a head on January 23 as the EU is expected to move a key meeting to this date on whether to embargo Iran’s oil, according to EU diplomats.

Latest Brent Oil Price

In London, Brent crude oil futures for February 2012 delivery was trading at $112.45 a barrel, 20.03 GMT today on the ICE Futures Exchange.

Iran’s threats to block the Strait of Hormuz if sanctions reduce Tehran’s oil exports continued to limit oil price losses after Iran confirmed it had started uranium enrichment at its Fordow nuclear plant.

EU Oil Embargo on Iran

The EU is expected to move up to January 23 a key meeting on whether to embargo Iran’s oil, according to EU diplomats. The question was originally expected to be addressed at a summit of EU leaders set for January 30.

“Overall, the geopolitical premium is supporting amid tensions with Iran, but on the other hand the price of crude oil in euros remains high and will hurt demand in Europe.” Olivier Jakob from Zug based consultancy Petromatrix said.

Speculators increased their net long positions in Brent crude oil prices and gas oil futures and options in the last week of 2011 and first trading day of 2012, ICE Futures Exchange data showed on Monday, as tensions between Iran and the West pushed up oil prices last week.

Saudi Arabia to Increase Oil Production?

Meanwhile, current tensions between the West and Iran may prompt Saudi Arabia to increase crude production, potentially putting pressure on oil prices, according to Goldman Sachs.

Saudi Arabia, the world’s biggest crude oil exporter, would export its crude to Europe, Jeffrey Currie, the bank’s head of commodities research, said at a conference in London. Iran would sell its crude to Asia, Currie said.

“Europe cannot take the risk of dealing with a supply shock out of Iran. It’s too fragile. So they get on a phone call with the Saudis, and start to secure cargoes. So you’re left with extra Saudi oil and extra Iranian oil going to China.” Currie said.

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Brent oil price hangs near $113 ahead of January 23 EU embargo on Iran’s oil