Oil up in Asia on Iranian tensions

5th December 2011, Comments 0 comments

Oil prices rose in Asian trade Monday after Iran's military reportedly said it had shot down a US drone, while France and Germany prepared for crucial talks aimed at rescuing the euro, analysts said.

New York's main contract, light sweet crude for delivery in January, was up 47 cents to $101.43 a barrel in the afternoon.

Brent North Sea crude for January delivery rose 57 cents to $110.51.

"Crude prices rose... boosted by heightened geopolitical tensions over Iran," Phillip Futures said in a report.

Tehran's military said it shot down a US Army drone inside its territory near the Afghan and Pakistani borders on Sunday and threatened retaliation for the incursion, Iranian media reported.

An newspaper also quoted the head of Iran's parliamentary economic commission as warning that oil prices would soar to $250 a barrel if the United States and European Union enacted a new set of sanctions against the country.

However, traders were cautious ahead of a meeting between the leaders of France and Germany with a plan to put an end to the region's crisis on the agenda, Phillip Futures said.

"Today, Chancellor Angela Merkel and French President Nicolas Sarkozy will hold talks in Paris in an attempt to bridge differences on a crisis resolution," it stated.

"Going forth, the European Union summit in Brussels on December 9 will be watched closely for the latest development (in the) eurozone debt crisis."

© 2011 AFP

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