By Alex Kennedy / AP
Singapore: Oil prices rose in Asia to near $130 a barrel on concerns that the threat of new sanctions against Iran over its nuclear program may escalate tensions in the oil-rich Gulf region.
Talks on Saturday ended with Iran stonewalling Washington and five other world powers on their call to freeze uranium enrichment. In response, the six gave Iran two weeks to respond to their demand, setting the stage for a new round of U.N. sanctions.
The US sent Undersecretary of State William Burns to the talks in hopes the first-time American presence would encourage Tehran into making concessions. “The talks’ lack of progress may lead to further isolation for Iran,” State Department spokesman Sean McCormack said Saturday.
Iran state radio on Sunday quoted President Mahmoud Ahmadinejad as saying the talks were ‘a step ahead’.
“The talks didn’t resolve the problem of Iran’s nuclear program, and that has been a factor in prices ticking higher today,” said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney. “Part of the reason prices had fallen recently was on the expectation a deal could be made there,” he added.
Midday in Singapore, light, sweet crude for August delivery was up 87 cents at $129.75 a barrel in electronic trading on the New York Mercantile Exchange. Monday’s price increase came after crude fell more than $18 from a trading record of $147.27 hit on 11 July.
The contract settled at $128.88 on Friday, down 41 cents.
“Prices also rose Monday on concerns that Tropical Storm Dolly may disrupt oil operations in the Gulf of Mexico,” Moore said.
The storm drenched Mexico’s Yucatan Peninsula and was expected to reach the Gulf of Mexico Monday afternoon packing sustained winds near 50 mph.
“Over the next 12 to 18 months we expect prices to fall on demand side adjustments to the high prices. But there are certainly chances for short-term spikes with issues such as Iran or storms,” Moore said.
In other Nymex trade, heating oil futures rose 1.79 cents to $3.7094 a gallon (3.8 liters) while gasoline prices rose 1.91 cents to $3.19 a gallon. Natural gas futures rose 14.8 cents to $10.718 per 1,000 cubic feet.
In London, September Brent crude rose 80 cents to $130.99 a gallon on the ICE Futures exchange.