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30 Dec, 2011 13:38

Oil prices go zigzag with concerns about Iran

Oil prices went up and down after the market appeared confused over Iran’s threat to block the major oil shipping route through the Strait of Hormuz.

On Friday crude for February delivery was up 29 cents, 0.3%, to settle at $99.65 a barrel on the New York Mercantile Exchange after it fell to $98.30 earlier. Prices shed nearly 2% on Wednesday, a reversal after a six-session rally of more than 8%. Brent for February settlement added 13 cents to $108.14 a barrel on the London-based ICE Futures Europe Exchange. It's headed for a 14 percent increase this year.The prices began to rise on Tuesday as Iran threatened to block shipping through the Strait of Hormuz — a key shipping route that provides 15.5 million barrels a day or about 40% of the world’s oil export. On Wednesday, the American military reportedly announced it will not allow Iran to disrupt traffic through the channel but on Thursday, Iran reportedly rejected the warning. Later on Thursday Brent prices fell about $1.7 and Light Sweet shed $1.98 (-1.95%) to $99.36 a barrel as Saudi Arabia promised to increase oil production should Iran block the Strait of Hormuz. But RT’s business editor Nick Pool is not pessimistic about the oil prices rises. “Completely disrupting supply, of course will have enormous impact”, he said. “However it seems to be unlikely to happen and the market is not banking on that. If you look at the way the prices have risen the last few days, it’s gone steadily upwards. But it hasn’t shown a huge leap. It doesn’t have people thinking “My goodness, they gonna cut it off”.