Oil Rises to Three-Day High as Saudis Seen Targeting $100 Crude
January 17, 2012, 9:13 AM ESTBy Ben Sharples
Jan. 17 (Bloomberg) -- Oil rose to the highest level in three days as France sought to limit delays for a ban on Iranian imports and Saudi Arabia’s energy minister said the world’s biggest crude exporter wants prices at $100 a barrel.
Futures climbed as much as 2 percent in New York to trade above $100. Saudi Arabia aims to stabilize the average of crude prices worldwide at that level in 2012, Ali al-Naimi said in an interview with CNN yesterday. France wants a European Union embargo delayed by no more than three months as members seek alternative supplies, an official with knowledge of the matter said yesterday. Iran, OPEC’s second-largest producer, has threatened to block oil shipments through the Strait of Hormuz in retaliation against international sanctions.
“The embargo story is certainly not going away,” said David Lennox, an analyst at Fat Prophets in Sydney who forecasts U.S. crude will average $110 a barrel this year. “The Saudis came out and said they were looking to target oil at about $100 a barrel. I suspect that’s what the driver has been.”
Crude for February delivery rose to as high as $100.67 a barrel in electronic trading on the New York Mercantile Exchange, up $1.95 from the Jan. 13 closing price, and traded at $100.65 at 3:45 p.m. Singapore time. Floor trading was shut yesterday for the Martin Luther King Jr. holiday and electronic transactions will be booked with today’s for settlement purposes.
Brent oil for March on the London-based ICE Futures Europe exchange gained as much 1.1 percent to $112.58 a barrel. The European benchmark contract was at an $11.65 premium to New York-traded West Texas Intermediate grade for the same month. The front-month spread was a record $27.88 on Oct. 14.
European Embargo
France is seeking a shorter exemption for crude contracts with Iran even as other EU members favor a six-month delay, according to a second official, who also asked not to be identified because the talks are confidential.
EU foreign ministers are scheduled to decide at a Jan. 23 meeting on the ban, which will probably include an exemption for Eni SpA, Italy’s largest oil company. An embargo requires unanimous approval by the bloc’s 27 states.
Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, can make up for any loss of crude output if sanctions are placed on Iran, al-Naimi told CNN. The minister doesn’t expect the Strait of Hormuz to be shut for an extended period of time. The waterway is a transit route for about a fifth of global oil trade, according to the U.S. Energy Department.
Emergency Supplies
The International Energy Agency will release oil stockpiles only in the event of a “serious” supply disruption, according to Maria van der Hoeven, executive director at the adviser to developed nations. The Paris-based agency is examining which countries have extra production capacity, she said yesterday in Abu Dhabi. It is due to release its monthly report tomorrow.
Oil’s gains were curbed after Nigerian labor unions suspended strikes and protests following President Goodluck Jonathan’s decision to limit gasoline-price increases. The country is an OPEC member and Africa’s largest oil producer.
China’s refineries boosted crude processing to a record in December because of a domestic diesel shortage, data from the National Bureau of Statistics in Beijing showed today. The country is the second-biggest oil consumer after the U.S. Its economy expanded 8.9 percent in the fourth quarter from a year earlier, beating the median 8.7 percent estimate of 26 economists surveyed by Bloomberg News.
--With assistance from Ann Kohn and Yee Kai Pin in Singapore. Editors: Mike Anderson, Paul Gordon.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
