The U.K. demanded the immediate release of the marines after the incident that occurred in the Persian Gulf at about 10:30 a.m. Iraq time today. Signs that the United Nations Security Council will impose new sanctions on Iran to suspend its nuclear program also bolstered prices. A draft that would freeze the assets of a bank and bar some exports was presented yesterday.
“Any time tension rises in the Persian Gulf you have to be concerned,” said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. “Worries that Iran would take oil off the market because of the nuclear dispute have been pushing prices higher for a while now. We are in a world that can’t afford to have any supply taken off the market.”
Crude oil for May delivery rose 79 cents, or 1.3 percent, to $62.48 a barrel at 11:38 a.m. on the New York Mercantile Exchange. Futures jumped to $62.65, the highest for a front-month contract since Dec. 26 and the highest for the May contract since March 9. The May contract is up 4.9 percent this week. Prices are down 2.2 percent from a year ago.
Draft Resolution
The Security Council may vote today or tomorrow on the draft resolution. The U.S. and European governments say Iran intends to produce nuclear arms. Iran says it is pursuing an atomic program for energy-generation.
The U.S. today issued visas for Iranian President Mahmoud Ahmadinejad and his delegation before the Security Council vote, Agence France-Presse said, citing State Department spokesman Sean McCormack. The Iranian leader has asked to address the Council.
Iran has the second-biggest proved oil reserves. Almost a quarter of the world’s oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.
Prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports. The average cost of oil used by U.S. refiners was $35.24 a barrel in 1981, according to the Energy Department, or $79.67 in today’s dollars.
“The big bullish factor out there is the threat to supplies in the Persian Gulf,” said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. “Stories like Iran’s seizure of British forces are the types of things that will send prices higher.”
Global inventories have declined as the Organization of Petroleum Exporting Countries implements an agreement to cut production by 1.7 million barrels a day.
Brent crude oil for May settlement rose $1, or 1.6 percent, to $63.51 a barrel on the London-based ICE Futures exchange. Futures touched $63.68 a barrel, the highest intraday price since Dec. 8.
Gasoline Demand
Increased concern about Iran comes as U.S. refiners prepare to increase gasoline output before the summer driving season. U.S. gasoline demand peaks between the Memorial Day holiday in late May and Labor Day in early September.
U.S. gasoline supplies slipped 16.7 million barrels, or 7.3 percent, to 210.5 million barrels in the past six weeks, the Energy Department report on March 21 showed.
Gasoline for April delivery in New York rose 2.2 cents, or 1.1 percent, to $1.9795 a gallon. The contract touched $1.9953 a gallon, the highest since Aug. 21.
Regular gasoline at the pump, averaged nationwide, rose 0.5 cent to $2.577 a gallon, according to AAA, the nation’s largest motorist organization. Gasoline prices have jumped 13 percent over the past month and are up 2.6 percent from a year ago.
