Oil jumps after attack on British embassy in Tehran

29th November 2011, Comments 0 comments

World oil prices surged Tuesday after protesters stormed Britain's embassy in Tehran, adding fuel to the already tense situation over Iran's nuclear program.

New York's main contract, light sweet crude for delivery in January, closed $1.58 higher at $99.62 a barrel.

Brent North Sea crude for January pushed up $1.82 to $110.82 in late afternoon London deals.

The rally in the market came after protesters stormed Britain's embassy and another diplomatic compound in Tehran on Tuesday, sparking international alarm just as Western powers were ratcheting up sanctions against the country for allegedly seeking to develop nuclear weapons.

EU nations were already expected to unveil more sanctions against Iran on Thursday, with France lobbying to place a ban on imports of oil from Iran, OPEC's second largest producer.

"The French president is talking about a Europe-wide ban on imports from Iran -- that is probably at least 450,000 barrels a day, maybe 650,000 barrels a day," said Adam Sieminski of Deutsche Bank.

"And there is an underlying fear that the proposals for the sanctions are a last effort before a possibility of military intervention becomes more serious," he said.

Also helping markets was a small but positive sign on the direction of the eurozone crisis -- Italy's pulling off a relatively successful 7.5 billion euro ($10 billion) bond auction.

The oil market won further support from news of rebounding US consumer confidence in November, with a key survey showing a recovery from the lowest levels seen in more than two years.

© 2011 AFP

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