Brent oil price trading firm over $123 as tensions over Iran push crude higher

The price of a barrel of Brent oil futures is holding out firm over $123 a barrel in trading on Thursday as tensions over Iran push crude oil higher, whilst better than expected economic data from China and the US bolstered the demand outlook.

Latest Brent Oil Price

In London, Brent crude oil futures for April 2012 delivery was trading at $123.63 a barrel, 14.14 GMT today on the ICE Futures Exchange, or 0.5 percent higher on the day.

Oil prices fell earlier this week as technical indicators such as the relative strength index for Brent suggested the rally was overdone, and some participants still see signs that the oil market rally is fragile.

Iran Tensions and Oil Supply

However, oil supplies from Iran, the second largest OPEC producer after Saudi Arabia, remain the key risk for the global market and a US government report said on Wednesday that Western sanctions on Iran were already disrupting its oil exports, and further restrictions could tighten global oil markets, which would add pressure to even higher oil prices.

“The existing supply-side disruptions and risk of them getting worse are supporting prices – Iran and the continuing conflict in Syria. The sell-off yesterday may have marked the bottom.” said Christopher Bellew, a broker at Jefferies Bache, London.

“With the background of Iran, oil investment certainly looks like a good investment these days. From a fundamental point of view, prices should be much lower. There’s at least $15 priced in from the Iran factor.” said Gerrit Zambo, trader at Bayerische Landesbank in Munich, who predicts Brent oil prices may rise to $127 a barrel.

Chinese Data

Meanwhile, a Chinese government survey on Thursday showed factories output grew more than expected in February, following on from a report on Wednesday showing the US economy grew faster than initially thought in the fourth quarter. This positive data tends to be bullish for oil prices.

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Brent oil price trading firm over $123 as tensions over Iran push crude higher