Oil prices peak to nine month highs as Iran stops oil supply to Britain and France

21-Feb-12

Iran claims to have halted crude exports to Britain and France in a dispute over its nuclear program. This has propelled oil prices to none month highs to nearly US$105. Benchmark crude rose to US$104.99 on the Nymex, while Brent crude rose to US$121.1 in London. Oil prices also received an impetus from China's decision to boost money supply in a bid to spur lending and economic growth. China's central bank said on Saturday it would lower the ratio of funds that banks must hold as reserves, a move that frees tens of billions of dollars. The European Union imposed sanctions on Iran's crucial fuel exports and included a freeze of the country's central bank assets and an oil embargo set to begin in July. In an apparent pre-emptive blow, Iran's oil ministry said yesterday it stopped crude shipments to British and French companies. The 27-nation EU accounts for about 18% of Iran's oil exports. The EU sanctions along with other punitive measures imposed by the US are part of Western efforts to derail Iran's disputed nuclear program, which the West fears is aimed at developing atomic weapons. Iran denies the charges, and says its program is for peaceful purposes.