Oil prices rise on Iran tensions, eurozone moves

5th December 2011, Comments 0 comments

Oil prices rose Monday on heightened tensions over Iran, a major exporter of crude, and following Franco-German moves aimed at safeguarding the eurozone, dealers said.

New York's main contract, light sweet crude for delivery in January, climbed 54 cents to $101.50 a barrel.

Brent North Sea crude for January gained 70 cents to $110.64 in late London trading.

"Crude oil prices have jumped higher today on the back of increasing tensions in the Middle East, namely Iran, as well as optimism that European leaders could well be starting to get ahead of the (eurozone debt) crisis," said Michael Hewson, an analyst at trading group CMC Markets.

Tehran's military said it shot down a US Army drone inside its territory near the Afghan and Pakistani borders on Sunday.

The incident, announced by Iranian media, came after Britain, Canada and the US last month slapped sanctions on Iran's financial, petrochemical and energy sectors.

That followed a UN agency report that strongly suggests Tehran is researching nuclear weapons.

The European Union followed suit by expanding a sanctions blacklist against Iranian firms and individuals, although Iran dismissed the UN report as baseless.

"There are rising concerns over tension in the Middle East, especially talk of an impending oil embargo on Iran by the US and leading European nations," said Westhouse Securities analyst Peter Bassett.

Elsewhere on Monday and after crisis talks between French President Nicolas Sarkozy and German Chancellor Angela Merkel, it was announced that France and Germany want a new EU treaty by March with tougher budgetary rules.

The two leaders made the announcement after crunch talks in Paris at the start of a crucial week for the euro, teetering on the brink because of its indebted member states ahead of a key EU summit in Brussels on Thursday.

Oil prices have lost some support in recent months with the escalating eurozone debt crisis weighing on the demand outlook for energy.


© 2011 AFP

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