Oil jumps as protestors storm British embassy in Tehran

29th November 2011, Comments 0 comments

World oil prices surged Tuesday as traders reacted to news that protesters had stormed Britain's embassy in Tehran.

New York's main contract, light sweet crude for delivery in January leapt $1.41 to $99.62 a barrel.

Brent North Sea crude for January rallied $1.93 to $110.93 in late afternoon London deals.

"Oil prices have jumped sharply after this afternoon's news from Iran of the British embassy being stormed ... while the jump in US consumer confidence also helped," said CMC Markets analyst Michael Hewson.

Protesters stormed Britain's embassy and another diplomatic compound in Tehran on Tuesday, sparking international alarm and dramatically raising tensions with the West over Iran's nuclear programme.

Protesters remained in both properties, trashing offices, stealing documents and defying police efforts to remove them, according to an AFP journalist and Iranian media at the scene.

Six British diplomats sequestered for more than two hours inside a building in Britain's diplomatic compound in the north of the capital were finally able to get through a crowd of hundreds of protesters after intervention from diplomatic police, the Fars news agency reported.

Washington condemned the storming of the British embassy in the "strongest terms" and called on Tehran to condemn the incident and prosecute those responsible.

Markets are already on tenterhooks over Iran, which is the second biggest OPEC oil producer after kingpin Saudi Arabia.

EU nations were expected to unveil more sanctions against Iran at a foreign ministers' meeting on Thursday, after a report by the UN atomic energy watchdog strongly suggested Tehran was researching nuclear weapons.

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.

The Conference Board said Tuesday that its consumer confidence index stood at 56.0 in November, up sharply from 40.9 in October.

Oil also rose on Tuesday on investor optimism over the eurozone crisis after an Italian bond auction that was seen as successful.

The Italian Treasury raised 7.5 billion euros ($10.05 billion) in bonds set to expire in 2014, 2020 and 2022. Analysts said it was a good amount, despite falling short of the target of 8.0 billion euros.

The eurozone member nation's borrowing rates also shot up to a new high above the 7.0-percent warning threshold that stoked investor fears that Italy was set for a bailout.

In reaction, the European single currency jumped above $1.34 on the back of the news.

The weaker greenback makes dollar-denominated crude cheaper for buyers using other, stronger currencies. In turn, that tends to boost oil demand and prices.


© 2011 AFP

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