Iranian oil technician Majid Afshari checks the oil separator facilities in Azadegan oil field, near Ahvaz, Iran. (AP/Vahid Salemi)Oil hovered below $102 a barrel Thursday in Asia amid conflicting
reports about whether Iran is cutting crude exports to Europe.
Benchmark crude was down 16 cents at $101.64 per barrel at midday
Singapore time in electronic trading on the New York Mercantile Exchange. The
contract rose $1.06 to settle at $101.80 per barrel in New York on Wednesday.
Brent crude was steady at $118.93 per barrel in London.
Iran's state media reported early Wednesday that the country was
taking steps to cut off oil exports to six European countries ahead of a
European embargo on Iranian oil coming into effect. Later Wednesday, state TV
quoted a Foreign Ministry spokesman saying crude oil exports to Europe have not
yet been cut.
"Contradictory information has emerged as to whether Iran will
voluntarily halt the supply of its crude to Europe before EU sanctions become
effective," Barclays Capital said in a report. "To some extent, it
does not matter too much: some similar move has been widely anticipated, and
those oil flows are inevitably stopping soon in any case."
Stopping Iranian shipments would mean European refineries will have to
find new sources of oil sooner than they expected. The European Union, which
buys about 18 percent of Iran's total crude exports, had planned to embargo
Iranian oil this summer to pressure the country to abandon its nuclear program.
Western nations, including the U.S., fear that Iran is building a
nuclear weapon. Iran denies the claim.
Tensions between Israel and Iran also continue to simmer.
Explosive devices were planted on Israeli diplomatic cars in India and
Georgia on Monday while a group of three Iranian men accidentally detonated
explosives Tuesday at a home they had rented in Bangkok.
Israel has accused Iran of waging a campaign of state terror and has
threatened military strikes on Iranian nuclear facilities. Iran has blamed the
Jewish state for the recent killings of Iranian atomic scientists and has
denied responsibility for all three plots this week.
"Policy and circumstances are now both running fast enough for
policy accidents and unintended consequences to play a role," Barclays
said. "The probability of the situation becoming 'hot' in some way that
affects the oil market is now significant and perhaps rising."
Some analysts argue slowing global economic growth and ample crude
supplies don't justify current prices.
"The current price of energy is significantly above the
underlying fundamentals," said Richard Soultanian of NUS Consulting.
"This cycle will only be broken once a conclusion to the Iranian situation
has been reached and/or the EU debt crisis ends."
In other energy trading,
heating oil was down 1.2 cents at $3.18 per gallon and gasoline futures slid
1.3 cents to $3.16 per gallon. Natural gas rose 0.7 cent to $2.43 per 1,000
cubic feet.
