As per Iranian state TV, Tehran had cut oil exports to six European countries in response to sanctions from the European Union. This was accompanied by positive developments in Europe’s sovereign debt crisis, pushing up oil prices to US$102. On Wednesday, benchmark crude rose by over one dollar to US$101.8 on the Nymex, and Brent crude rose by US$1.76 to US$119.1 on the ICE Futures exchange.
European sales account for about 18% of Iran’s total crude exports and its main buyers include Greece, Italy and Spain. Also boosting prices were positive developments for the European debt crisis, as China confirmed it would continue investing in the safest EU bonds. In Greece, the head of the Conservative party, which along with the Socialists form the governing coalition, made a written commitment to the terms of the second bailout — a key requirement for the process to move ahead and prevent a default next month.
Interestingly, a report by US energy trader and consultant Stephen Schork forecasts oil prices will fall due to caution in the U.S. at the gas pump after a report showed January retail sales grew only modestly.