Supply fears pushes up oil

OIL prices jumped two per cent yesterday as fears over Iran and threats to major shipping lanes sent US crude above $100 a barrel.

Crude futures briefly surged nearly $4 a barrel after a frenetic spell of trading in New York at the start of the day. The rise was also driven by the closure of the Houston Ship Channel, reports of bombs hitting an Iraqi crude pipeline, hopes of further US monetary easing – later dashed – and computer-driven trades.

It came as price hawks at oil cartel Opec moved closer to accepting a new group output target that would legitimise a major increase in supply from rival producers Saudi Arabia and its Gulf allies over the last six months.

Yesterday Brent crude for January deliver rose $2.24 to settle at $109.50 a barrel, after reaching $111.10 in the day. Brent’s 2.09 per cent gain was the biggest one-day percentage rise since 28 November. US crude rose $2.37 to settle at $100.14 a barrel, after reaching $101.25.

A day after an Iranian MP suggested the military would practice shutting the Strait of Hormuz, the world’s most important oil shipping route, the International Energy Agency warned tougher EU sanctions on Iran may lead to higher global crude prices.