US Eyes Iran Oil, and Bids to Halt Nuclear Program

The United States has been aiming to thwart Iran’s nuclear program and intends to cut Iran from any financial transactions of international level. A report released by the United Nations Atomic Energy Agency said that the sanctions imposed on Iran do not stop it from further nuclear works.

In response to this the Obama government declared that the entire financial sectors in Iran including the central bank are involved in laundering of money. Resultantly it let out the anti-terrorism USA Patriot Act that targets financing of Iran directly as well as indirectly.

In a Press Conference in Washington, Timothy F. Geithner said that any institution that engages in any sort of transactions with the Iran banking system will be at t risk of supporting Iran's illicit activities: its pursuit of nuclear weapons, its support for terrorism. Financial institutions around the world should think hard about the risks of doing business with Iran."

Michael Wittner, the head at Societe Generale SA in New York for oil-market research said, "There are new sanctions on Iran and rioters back on the streets of Cairo reminding us of the geopolitical risks that impact this market.”

The US has further imposed sanctions on companies that would supply any sort of goods and services to oil and gas industries in Iran. It has further prevented Iran from obtaining financial and technical aid from outside companies.

President Obama’s national security advisor said, "We have succeeded in slowing its nuclear program, the international community has the time, space and means to affect the calculus of Iran's leaders."

The US administration further tightened sanctions ruling out any aid to Iran in order to help it develop its petroleum resources, that might accrue to a $1 million value or any such deals that might amount to $5 million over a period of one year, said the Treasury Department.

Oil Prices Low in US as Europe Worries

With the US growth data showing a weak picture and the debt crisis weighing high on the European market, Crude oil prices were remarkably low on November 23, 2011. The light sweet crude, NY’s main contract for delivery was down by 53 cents and reached at $ 97.48 per barrel. Meanwhile Brent North Sea Crude for January delivery lost 26 cents and stood at $ US 108.77.

The crude markets painted a dismal picture, as a result of the depressed economic situation in United States as well as in Europe, reported Barclays Capital. It stated, "Macro concerns remain in the driving seat and, with a slightly softer fundamental picture, downward pressure.”

On the other hand the US Commerce Department on November 22, 2011, reduced its third quarter estimate of US growth from 2.5 percent to 2.0 percent. It also tried to avoid to talk of crude oil prices since US is the largest consumer of oil in the world. Europe’s woes pertaining to the stagnant debt condition worsened the position of the traders further.

It added, “Key event risk, particularly related to European politics and sovereign debt markets, is set to continue to be the main driver of risk assets in the coming weeks and oil is unlikely to remain unscathed."

The IMF (International Monetary Fund) on November 22, made an announcement regarding the new lending facility that aimed at providing “bystander” countries a protection from any sort of contagion during the financial crisis, thereby sparking off a crude oil rally. This announcement did not clearly mention the names of the benefitting countries, but it seemed apparent enough that it was designed specifically for Italy and Spain, which are under the pressure of massive debts, but the fiscal imbalances are reasonably sustainable over a short span of time.

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Supply Concerns and European Plans Escalate Oil Prices

On Tuesday November 22, 2011, oil prices yet again rose, due to mounting concerns over the strife in Middle East and the resultant disrupting of supplies, along with hopes that the European crisis will not have a spillover effect on the world economy.

Benchmark West Texas Crude rose to reach $ 98.01 in New York. Brent Crude used as the key to price oil produces in other countries rose to $108.65 per barrel in London.

The rise in oil prices are a result of the concern that the latest sanctions imposed on Iran might reduce the outflow of oil from the otherwise largest oil producer in the world. Moreover Egypt witnessed large spurts of violent protests and stirred apprehensions that it might further disrupt supplies. Though Egypt is not a large oil produce, it definitely controls vital supplies of energy and has considerable influence in the region surrounding it.

The worst of all fears that wielded was as a response to the European debt crisis, and that any worsening of it might aggravate the financial gridlock in other parts of the world. The IMF however has announced that it has plans to spread the spilling over of the European debt crisis, and would thus provide easy cash to countries that are facing financial stress.

The European debt crisis might lead to worsened industrial activity in and around the region and thus push the recession outwards.

Meanwhile the US economy, as reported by the Commerce Department, is slowly recovering, with its growth rate being slower than what it was in the summers, resulting in a sluggish movement in the stock market as well.

Andrew Lipow, an oil analyst in Houston said, “The market is concerned on the one hand about the rate of economic growth, on the other hand issues in the Middle East are continuing.”

Surprise US Oil Supply Makes Oil Fall below $99

Oil Prices on Wednesday, November 16, 2011 plummeted below $99in Asia, as a response to a report from US that showed increased Crude Oil supplies from the US. This made a weak demand an obvious fact.

Likewise benchmark crude up for delivery in December recorded a 70 cent fall, and reached to $98.67 per barrel in the Singapore electronic trading, on NY Mercantile Exchange. In New York though, it rose by $1.23 and settled finally at $99.37.

Brent Crude up for January delivery dropped by 67 cents and was around $111.51 per barrel on the ICE Futures Exchange, London.

The Crude supplies from US, said the American Petroleum Institute added another 1.3 million barrels, contrary to the predictions of analysts by Platts, the energy information wing of McGraw-Hill Cos, which estimated a fall in supply by 1.5 million barrels.

Parallel inventories of gasoline fell by approximately 2.9 million barrels, and distillates fell by 2.6 million barrels as reported by the API. The crude prices have been surging since late October hoping on a better US response to the expected recession, retail sales too raised in the same month, the fifth straight, said the Commerce Department.

"Market momentum remains heavily skewed toward the upside," Ritterbusch and Associates – energy consultants said in a report. "We still expect an advance into the $100-102 zone as early as Wednesday."

In the upcoming week thus traders will keenly be watching the scores of US industrial production and housing.

It is the recent consumer reports that show they are highly spending and thus allowing other manufacturing activities to grow, this has led to the current position. Nigeria, one of the top five countries that export oil to the US has as well complained of a recent fall in oil production rates due to spillage.