London: Oil traded near the highest in more than two years in London as civil unrest spread in the Middle East, renewing concern crude shipments will be disrupted.
Crude oil fluctuated in New York as Iranian state-run television said the country was sending two warships through the Suez Canal and US jobless claims rose more than estimated in a labour department report. Oil slipped after gaining as much as 0.4% as Iran’s Press TV said an unidentified naval official confirmed the ships’ itinerary.
Brent futures were little changed after closing at the highest level on Wednesday since September 2008 as pro-democracy demonstrations stretched into a third day in Bahrain, while protesters clashed with police in Yemen and Libya, the eighth biggest oil producer in the Organization of Petroleum Exporting Countries (Opec).
The risk premium from the whole Middle East story is more reflected in Brent, said Tobias Merath, head of commodity research at Credit Suisse AG in Zurich. The divergence between Brent and WTI is stunning, and explained by regional factors.
Brent crude for April settlement was at $103.67 (Rs 1,634.4) per barrel, down 11 cents, at 1.39pm on the ICE Futures Europe exchange in London after advancing as much as 52 cents to $104.30 per barrel. The contract rose on Wednesday by $2.14 to $103.78, the highest close since 25 September 2008.
Crude for March delivery on the New York Mercantile Exchange was at $84.88 a barrel, down 11 cents. The contract rose 0.8% on Wednesday to $84.99, the highest close since 11 February. Oil in New York is up 9.9% from a year ago.
Political risks to oil supply are high and rising amid unrest in the Arab world, JPMorgan Chase and Co. said in a report.
Pro-democracy protesters in Bahrain stepped up demands for the government to resign after an overnight security crackdown left at least three people dead. The Associated Press reported the first protests against Libyan leader Muammar Qaddafi, who has held power since leading a military coup in 1969.
Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 61% of proved reserves in 2009, according to BP Plc., which publishes its BP Statistical Review of World Energy each June.
Political tensions in the Middle East continued to intensify, adding to crude supply disruption concerns, Mark Pervan, head of commodity research at Australia and New Zealand Banking Group Ltd in Melbourne, said on Thursday.
Libya pumped 1.59 million barrels of crude a day in January, making it the eighth biggest oil producer among those with quotas in Opec, Bloomberg estimates show.
Christian Schmollinger in Singapore and Ben Sharples in Melbourne contributed to this story.