Oil prices rose modestly on Monday, easing off earlier highs, after an Iranian official said the standoff over 15 British sailors and marines held by Iran could be resolved without a trial. US crude settled up 7 cents at $65.94 a barrel, after trading as high as $66.69 earlier.
London Brent crude gained 64 cents to settle at $68.74 a barrel. Brent is more sensitive to developments in the Middle East because of proximity. Oil prices had jumped on news that the United States was asking Iran to provide information about a former FBI agent believed to have gone missing while on private business there.
Comments from Ali Larijani, the secretary of Iran's Supreme National Security Council, that Tehran wanted to resolve the dispute over the British personnel through diplomacy and not through a trial erased much of oil's early gains.
"This issue can be resolved and there is no need for any trial," Larijani told Britain's Channel 4 News in a television interview from Tehran.
He added that there should be a "delegation" to clarify if the sailors and marines had strayed into Iranian waters, as claimed by the government. Iran seized the British sailors and marines on March 23, accusing them of entering its territorial waters. The dispute has raised tensions between the West and the world's No 4 oil exporter, already high over Tehran's disputed nuclear program. "Every twitch is going to produce a reaction now," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA.
Analysts say it would be difficult to replace the roughly 2.5 million barrels per day of oil exported by Iran, which also borders the Strait of Hormuz, conduit for two-fifths of globally traded oil.
"In the current tight supply environment, a potential disruption of Iran's oil supply could have a very significant impact on global oil balances," Goldman Sachs analysts said. "We estimate that the amount of 'effective' spare capacity accessible in the short run to potentially replace Iran's over 2.3 million bpd exports is only 1.7 million bpd. The concerns over Iran come as the United States gears up for the summer gasoline season.
Product supplies in the world's top energy consumer have fallen in recent weeks due to heavy refinery work. Analysts polled by Reuters forecast weekly government inventory data to be released on Wednesday would show declines of 800,000 barrels in gasoline stocks and 600,000 barrels in distillates.
Crude oil stockpiles were expected to rise 1.6 million barrels for the week ending March 30, the poll showed. Supply concerns eased a bit with the end of a strike by workers at French Mediterranean oil terminal Fos-Lavera, the world's third biggest port for refined oil products, on Saturday. The 18-day strike had threatened fuel flows to the United States and the domestic French market.
SYDNEY: US crude futures eased on Monday, as the row between Iran and Britain reached a stalemate and as workers at French oil hub ended a three-week-old strike.
US crude fell as much as 35 cents at the start of Monday session but later recovered from lows to stand 9 cents lower at $65.78. Oil closed 16 cents lower at $65.87 a barrel on Friday, the first decline after eight consecutive sessions of gains. Prices have risen more than 16 percent since March 19 and rallied to a six-month closing high on Thursday. London's Brent crude was up 9 cents at $68.19.
Comments
Comments are closed.