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NEW YORK (AP) — Oil prices briefly spiked to the highest level in three weeks following a report that Iranian oil exports dropped significantly this month.Iran, the world’s third-largest oil exporter, has been locked in a high-stakes standoff with the West over its nuclear program. The U.S. and Europe, who think Iran may be working on a nuclear bomb, are applying pressure on Iran to open its facilities to inspection. European Union countries and Japan have scaled back purchases of Iranian crude. And a banking services firm also has made it tougher for Iran to sell its oil by blocking financial transactions with major Iranian banks.
The new report suggested that sanctions are starting to impact the country’s oil industry. It said Iran’s shipments tumbled by 300,000 barrels per day, or 14 per cent, this month. Less oil on the market means remaining barrels get more expensive.
Benchmark U.S. crude rose by $1.76 to $107.11 per barrel in New York. Earlier, prices jumped by $2.95 per barrel in 13 minutes to $108.25, the highest price for benchmark crude since March 2. Brent crude, which is used to price oil imported by U.S. refineries, rose by $1.81 to $124.95 in London.
“The market’s a powder keg with a very short fuse,” independent oil analyst and trader Stephen Schork said.
Besides the headlines about Iranian exports, Schork said oil prices tend to rise anyway ahead of the weekend, when commodities markets are closed. Many people buy oil contracts as an insurance policy — in case there is a flare-up of tensions in the Middle East, a pipeline explosion or some other unforeseen calamity that drives up oil prices, he said.
Iran has topped the list of major concerns among oil traders this year. It’s helped push benchmark oil about $10 per barrel higher since January. If tensions ease between Iran and the West, expect oil prices to fall by $15 or more per barrel, Schork said. Gasoline prices would likely come down, too.
The national average for gasoline has jumped by 19 per cent since the beginning of 2012 to the highest levels ever for this time of year. Pump prices continued to rise Friday, adding nearly a penny to $3.89 per gallon, according to AAA, Wright Express and Oil Price Information Service.
Experts predict the national average could peak in April, rising as high as $4.25 per gallon. Gasoline already is above $4 per gallon in nine states and Washington, D.C.
In other energy trading, heating oil and gasoline futures both added 4 cents per gallon at $3.22 and $3.38 per gallon, respectively. Natural gas futures rose 4 cents to $2.31 per 1,000 cubic feet.
Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP
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