Oil prices edge up amid weaker US growth, Iran sanctions

22nd November 2011, Comments 0 comments

Oil prices edged higher on Tuesday as traders reacted to weaker-than-expected US growth data and new economic sanctions on major crude exporter Iran.

New York's main contract, light sweet crude for delivery in January, nudged up five cents to $96.97 a barrel, off gains of above one dollar ahead of the US data.

Brent North Sea crude for January advanced 86 cents to $107.74 in late London deals.

"Geopolitical risks are giving buoyancy to oil prices," said Commerzbank analyst Carsten Fritsch.

Western powers on Monday imposed a new batch of sanctions targeting Iran's energy sector amid speculation of a possible Israeli military strike against Tehran.

"This affects not only the financial sector but also the country's oil industry, increasing the risk of supply bottlenecks," Fritsch said.

After winning a boost from the sanctions, prices slipped back on profit-taking as official data showed the US economy grew more slowly than originally thought in the third quarter.

The Commerce Department on Tuesday cut its growth rate to 2.0 percent from the first 2.5 percent estimate of a month ago, surprising many economists who had expected no change.

The United States, which is the world's biggest consumer of oil, joined Britain and Canada on Monday by imposing fresh sanctions on Iran.

An angry Iran and its powerful ally Russia slammed the move imposed over Tehran's suspect nuclear programme, insisting on Tuesday that they were illegal and futile.

The measures against Iran's financial, petrochemical and energy sectors amounted to no more than "propaganda and psychological warfare," Iranian foreign ministry spokesman Ramin Mehmanparast said.

They were "reprehensible" and would prove ineffective, he added.

Russia -- which with China blocked any possibility of the Western steps going before the UN Security Council for approval -- said the sanctions were "unacceptable and against international law."

The United States and its allies cited a November 8 report by the UN's International Atomic Energy Agency asserting "credible" evidence of Iranian nuclear weapons research as justification for the new sanctions.

Iran has dismissed the IAEA report as "baseless" and biased. It insists its nuclear programme is for exclusively peaceful, civilian purposes.

© 2011 AFP

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