An oil rig is shown in this file photo.
An oil rig is shown in this file photo.

Oil prices rise on Iran tensions

By SAPA Time of article published May 28, 2012

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Oil prices rose on Monday as major crude producer Iran and Western powers failed to reach agreement over Tehran's nuclear programme and as the dollar weakened against the euro, analysts said.

New York's main contract, West Texas Intermediate crude for delivery in July gained $1.01 to $91.87 a barrel.

Brent North Sea crude for July won $1.14 to $107.97 in London midday deals.

The issue of Tehran's uranium enrichment and stockpile had been at the centre of talks last week between Iran and major world powers Ä who believe the country's nuclear activities mask a push to build atomic weapons.

Iran, already under heavy sanctions for refusing to suspend its nuclear programme, has denied the accusations and threatened to disrupt Middle East oil supply if it is faced with further sanctions.

“Iran and the Grexit drove oil prices down during the first half of last week, but developments on both issues have turned them into support for oil prices,” Tamas Varga, an analyst at brokers PVM Oil Associates, said on Monday.

“It doesn't require a huge understanding of international politics to read Iranian tactics on the nuclear issue, and it was probably naive to think at the beginning of last week that any agreement between Iran and world powers was even remotely possible.”

Traders said that oil prices were also supported by a weaker greenback, which makes dollar-denominated crude cheaper for holders of other currencies, boosting demand and in turn prices.

The euro rose versus the dollar on Monday after opinion polls indicated a victory for pro-austerity conservatives in Greece's upcoming general election.

Greek pro-bailout conservative party New Democracy is favourite to secure most seats in the June 17 general elections but without an outright majority, a series of opinion polls showed on Sunday.

The new polls point to a New Democracy victory ranging between 23.3 percent and 25.8 percent of the vote, a result that would require the party to seek additional allies to form a viable government.

Even so, such an outcome in next month's vote could mean that Greece would respect the terms of its European Union-International Monetary Fund bail-out and remain a member of the eurozone. - Sapa-AFP

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