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World oil prices rally on Iran, Nigeria concerns

LONDON (AFP) – World oil prices rebounded sharply on Thursday as concerns over supply disruptions in Iran and Nigeria outweighed data showing weak US energy demand, analysts said.

New York’s main contract, West Texas Intermediate crude for delivery in February, jumped $1.14 to $102.01 a barrel.

Brent North Sea crude for February gained $1.36 to $113.60 in London late morning deals.

“The US/European-led sanctions on Iran look to tighten and have caused some Asian buyers to begin to look to alternative supplies,” said Sanjeev Gupta, who heads the Asia-Pacific Oil & Gas practice at Ernst & Young.

“Iran’s threat to disrupt shipping through the Strait of Hormuz is keeping markets on edge, particularly Asian markets.”

Western powers are moving to tighten sanctions on Iran, accusing the country of trying to develop nuclear weapons.

Tehran has denied the allegations, saying its nuclear programme is peaceful and has threatened to block the strategic Strait of Hormuz if fresh sanctions are imposed, a move sure to escalate tensions.

“The sanctions … could have a knock-on impact on spare capacity, should other countries, such as Saudi Arabia, have to increase output to fill the gap,” Barclays Capital said in a market commentary.

Prices also got support from rising European equity markets and the weaker dollar, in the wake of successful bond auctions in Spain and Italy.

The European single currency advanced to $1.2748 from $1.2707 in New York late Wednesday.

“Well-bid Italian and Spanish (bond) auctions have no doubt supported risk appetite as the US dollar tracks back to (put) upward pressure on commodities,” Sucden analyst Jack Pollard said.

Prices fell Wednesday following news of a surprisingly big increase in US crude oil reserves and slowing economic growth in Germany.

US crude stockpiles jumped by five million barrels last week in the world’s biggest oil consumer — five times the amount forecast by analysts.

The build in US crude inventories was “doubtless encouraged by the threat of supply disruptions in Iran and the Strait of Hormuz,” Nic Brown at Natixis said.

The eurozone debt crisis produced more worrying signs of distress, this time in Germany, Europe’s biggest economy.

 

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