Oil prices recently increased with new tensions from Iran’s threat to close the Strait of Hormuz in response to the pending oil embargo combined with a continuing strike that closed some of Norway’s oil production.
In the NYMEX, the price of light, sweet, crude for delivery in August rose by $3.91 to end at $87.66 per barrel.
In London, Brent North Sea current crude oil prices for August delivery finished at $100.68 per barrel, an increase of $3.34 from its closing level a day before.
Price Futures Group’s Phil Flynn said that the strike in Norway and the embargo of Iranian oil are giving the market for oil a reason to rebound.
Crude oil prices recently declined with China’s disappointing economic news as the largest energy consumer of the world. This was a surprising fall because it occurred along with the first drop in US output in a three-year period and the evaluation of the markets on the effect of the European Union trade sanctions on oil produced by Iran .
The embargo of Iranian oil by the European Union took full effect on July 1. That provoked Tehran’s anger, saying that it will hurt discussions with global powers about its disputed nuclear activities.
Recently, current crude oil prices rose after missiles from Iran were test-fired into the central part of its desert region. That led to a warning from the US that such missle testing violates the resolutions of the United Nations banning Iran from any activity involving ballistic weapons.
In the meantime, about 120 lawmakers in the 290-seat parliament of Iran supported draft legislation seeking the closing of the Hormuz Strait to oil tankers going to Europe as a way to retaliate for the embargo of the European Union on its crude oil.
Analysts and observers of the oil market say that the embargo of the European Union, together with financial sanctions in the US are cutting the important oil exports of Iran, which account for 50% of its government’s revenues.
According to the IEA, the crude exports of Iranian oil for the month of May seem to have declined to 1.5 million barrels daily amid market preparations for the embargo, which had been announced on January 23rd.
Another reason for the increase in crude oil prices is a strike by Norwegian oil workers that has gone on for over 10 days now. The action regarding pensions has reduced around 10% of the entire output of the world’s eight biggest exporter of oil, said the Norwegian Oil Industry Association.
By: Chris Termeer