Oil Rises as Greek Approval of Austerity Plan Bolsters Optimism

Oil Rises as Greek Approval of Austerity Plan Bolsters Optimism

Oil climbed after the Greek
parliament’s approval of an austerity plan bolstered chances for
a solution to Europe’s debt crisis and on increasing concern
that Iranian crude supplies will be disrupted.
Futures rose as much as 2 percent, the euro strengthened
and the global equity market advanced after passage of the
package needed for 130 billion-euro ($172 billion) in aid. Crude
may extend gains after companies controlling more than 100
supertankers said they would stop loading cargoes from Iran,
tightening sanctions on OPEC’s second-biggest producer.
“The approval of the Greek austerity measures gave the
euro a boost and sent equities higher,” said Chris Dillman, an
analyst and broker at Tradition Energy in Stamford, Connecticut.
“The news that shippers will stop loading Iranian cargoes is
also driving the market higher.”
Crude for March delivery increased $1.78, or 1.8 percent,
to $100.45 a barrel at 9:08 a.m. on the New York Mercantile
Exchange. Futures are up 17 percent from a year ago.
Brent oil for March settlement rose $1.25, or 1.1 percent,
to $118.56 a barrel on the London-based ICE Futures Europe
exchange.
Passage of the austerity bill in Greece puts the spotlight
on a meeting of euro-region finance ministers on Feb. 15 in
Brussels to decide whether to approve the aid package.
Resolution of the negotiations, which started in July, would
help contain the threat that speculators will target debt-
saddled countries, including Italy and Portugal.
The 27 EU member states accounted for about 16 percent of
global oil demand in 2010, according to BP Plc’s annual
Statistical Review of World Energy.

Limiting Transport

Overseas Shipholding Group said Feb. 10 the pool of 45
supertankers from seven owners in which its carriers trade will
no longer call at Iran. Nova Tankers A/S and Frontline Ltd.,
with a combined 93 vessels, said Feb. 9 and Feb. 11 they won’t
ship crude from the Persian Gulf nation.
The European Union’s Jan. 23 agreement to embargo Iran’s
oil starting in July because of its nuclear program extended the
ban to ship insurance. With about 95 percent of the tanker fleet
insured under rules governed by European law, fewer vessels will
be able to load in Iran.
“Iran is what’s really pushing crude up,” said
Christopher Bellew, a senior broker at Jefferies Bache Ltd. in
London. “If Iranian exports are choked off because of the
insurance issue, we will see higher prices. The stronger euro is
contributing to today’s price increase, but I don’t think a
bailout will lead to a miraculous recovery in Greece.”

‘Nuclear Accomplishments’

Iranian President Mahmoud Ahmadinejad said Feb. 11 he will
unveil “major nuclear accomplishments” in coming days, state-
run Press TV reported. Iran has threatened to block shipments
through the Strait of Hormuz, a transit route for about 20
percent of the world’s globally traded oil.
Hedge funds and other large speculators increased bullish
bets on oil by 4,440 contracts, or 2.2 percent, to 205,709 in
the week ended Feb. 7, the U.S. Commodity Futures Trading
Commission said in a weekly report Feb. 10.