Brent crude rose above $111 on Friday as comments from Iran that it might stop exports to the European Union intensified worries about security of supply, while positive economic data from the United States also acted as a support.
Brent crude rose 55 cents to $111.34 a barrel by 4.41pm UAE time, and is up around 1.4 percent so far this week, after two weeks of losses.
US crude gained 57 cents to $100.27, and is set to rise about 1.2 percent this week, also reversing two weeks of losses.
A law to be debated in Iran’s parliament on Sunday may halt oil exports to the European Union as early as next week, foiling an EU plan to phase in an oil embargo gradually to help its struggling economies adapt, lawmakers said on Friday.
If Iran stops crude exports to the EU earlier than July when an EU ban on Iranian crude takes effect, it could cause problems for some countries which are heavily dependent on the oil.
However analysts were sceptical about this happening.
“I think it’s sabre rattling,” said Michael Hewson, analyst at CMC Markets.
“It wouldn’t give time for some countries to find alternative sources for their energy needs, but Iran needs the money for the oil, and it will take time to find alternative buyers in Asia,” he said.
A Reuters poll predicted it would come in at 3 percent.
“US durable goods yesterday were very good, so if it’s anywhere near the 3 percent we could see a risk rally.”
New orders for US manufactured goods rose in December and a gauge of future business investment rebounded. The Commerce Department said orders for durable goods climbed 3.0 percent last month. Economists had forecast orders rising 2.0 percent .
However, worries about prospects for the euro zone due to ongoing uncertainty about the debt situation dragged equities lower and kept oil’s gains in check.
Portuguese five- and 10-year government bond yields were set to remain under pressure after hitting euro-era highs on Thursday as fears grew that the country may follow Greece in requiring another bailout or seeking to restructure its debt.
Athens is locked in tough negotiations with its private creditors on a restructuring it needs quickly to avert a disorderly default when a major bond redemption falls due in March.
Greece’s bondholders are demanding the European Central Bank contribute to a deal to put the country’s messy finances back on track.
Brent crude has been in a range between $109 and $115 a barrel since the start of the year.
“Oil is caught in a range because of geopolitical risk factors and the relatively strong U.S. economic numbers,” said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.
“On the other hand, you have Europe. The Europe debt crisis is not going to go away anytime soon.”
The pull and push factors will keep the U.S. benchmark trading in a $95 to $105 a barrel range, with Brent being about $10 higher, Nunan said.
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