Brent Oil Rises after US Military Move in Persian Gulf

A029358010.jpgTEHRAN (FNA) ICE Brent crude futures rose above $97 on Monday after a news report that several US warships patrolling around Iran’s territorial waters in the Strait of Hormuz received a warning from Iranian forces.

Five Iranian speedboats warned three US navy ships to keep away from the Islamic Republic’s territorial waters in the strategic Strait of Hormuz in the Persian Gulf over the weekend.

Pentagon officials said that no shots were fired during the encounter, which occurred Saturday in international waters adjacent to Iranian borders, but meantime pointed out that the US Captain was on the verge of issuing the required orders for opening fire on Iranian naval vessels patrolling the area.

The speedboats came within a couple hundred meters of the US vessels, the official said.

Oil flows through the Strait account for roughly 40 percent of all globally traded oil supply.

The International Energy Agency estimated 13.4 million barrels per day of crude passes through the narrow channel on tankers.

The Pentagon official would not identify the US navy ships passing through the Strait at the time of the incident.

Iran has traditionally been responsible for protecting security of the Strait of Hormuz throughout the past centuries as a part of the strait is located inside Iranian borders.

US officials have not yet explained why their warships disturbed tranquility of the very sensitive region by patrolling in an area adjacent to the Iranian borders in the deeply strategic Strait of Hormuz which links the Persian Gulf to the Sea of Oman, the only passage for tankers and trade ships traveling from the East to the West side of the world.

An explosion at a fuel storage tank caused by a huge blaze at Iraq’s largest refinery also supported prices.

Prices were lower earlier in the session on unusually warm weather in the US Northeast and worries over the US economy.

US crude hit a record $100.09 on Thursday but has since pulled back as gloomy US economic data weighed. Brent also hit a lifetime peak of $98.50 last week.

OPEC president Chakib Khelil said on Saturday he expected oil prices to keep rising during the first quarter of this year before stabilizing in the following quarter.

He linked the steady rise of oil prices to “political tension in Pakistan, escalating violence in Nigeria and a decline of oil inventories in the United States,” he told the Algerian official news agency APS.

Technical analysts believed the market would rebound once again above $100, saying losses will only be temporary.

“Despite the lower closes, we continue to see the downside as a counter trend and corrective,” said Phil Roberts of Barclays Capital.

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