Oil: Price falls US$1 as Iran sanctions seen
distant
03/02/2006
LONDON - Oil fell US$1 a barrel on Thursday as US and European
leaders played down the threat of United Nations sanctions against
Iran.
US light crude fell US$1.01 to US$65.55 a barrel by 1710 GMT,
following a slide of over a dollar in the previous session. London
Brent crude fell US$1.23 to US$63.80 a barrel.
"A bit of the premium in the oil price on Iran has been taken off
today," said Craig Pennington, an analyst at investment bank
Schroders. "The market interpretation (of US comments) is that
there will be no sanctions and that oil won't be used."
US and European leaders, aware that Russia, China and developing
nations are keen to avoid a confrontation with Iran, said Security
Council involvement did not mean an end to diplomacy or that Iran
would necessarily face sanctions.
"Let me be clear: we are not now seeking sanctions or other
punitive measures against Iran," US Ambassador Gregory Schulte told
the board of the International Atomic Energy Agency in
Vienna.
The UN's nuclear watchdog inched toward reporting Iran to the UN
Security Council over fears it is secretly seeking to develop
atomic bombs.
On Wednesday, Iranian President Mahmoud Ahmadinejad angrily
rebuffed international pressure on his country's nuclear aims hours
after US President George W. Bush vowed to stop Tehran from making
an atomic bomb.
"I am telling those fake superpowers that the Iranian nation became
independent 27 years ago and... on the nuclear case it will resist
until fully achieving its rights," Ahmadinejad told a crowd of
thousands in the Gulf port city of Bushehr.
Tehran's standoff with the West has kept the market on edge for
weeks over possible supply disruptions, although it has said it
would not mix politics with oil.
Fear of a major supply disruption has pushed prices up over 10 per
cent so far this year.
In a Reuters interview aboard Air Force One, Bush said he saw a
"very good chance" the IAEA will refer Iran to the Security Council
for possible sanctions.
However, consideration of such an action is not expected until
after the UN's atomic watchdog presents a conclusive report on
March 6.
US oil stocks
The steep drop in oil prices on Wednesday came after the US Energy
Information Administration (EIA) reported a 4.2 million-barrel rise
in petrol supplies in the world's largest energy consumer last
week, nearly four times analysts' expectations, prompting funds and
locals to take profit.
The petrol stockbuild erased a year-on-year deficit that had
attracted heavy buying by funds betting on a supply crunch in the
run-up to the US summer driving season.
Warm winter in the key heating oil region of the US northest has
sent the country's weekly stocks up 1.8 million barrels to 59.6
million barrels, 27 per cent above year-ago levels, EIA data
showed.
The world's third largest consumer Japan reported sharply lower
crude inventory figures.
Japan's commercial crude oil stocks fell below 15 million
kilolitres (94.5 million barrels) for the first time in more than
three decades last week as refiners ran at top tilts to supply
heating fuel for an unusually cold winter.
Japanese refiners have been running at peak rates around 94 per
cent of capacity in the past few weeks as sales of kerosene, the
main heating fuel, shot to record highs in December.
- REUTERS