Protests in Kazakhstan, supply halts in Iran bolster oil investments

Crude oil futures extended their leads in the U.S. today, after early trade figures showed potential supply disruptions coming from Kazakhstan. The former Soviet nation’s oil workers have been protesting for more than three days now, stirring doubts that output will proceed unhindered from the Central Asian supplier, and bolstering commodity prices as a result.

The increases crude oil experienced were limited however, as traders remained anxious over the continuous debt crisis in the euro zone, as well as the potential instability Kim Jong Il’s death might bring to global markets.

West Texas Intermediate crude oil prices for delivery in January gained 36 cents and settled at $94.25 per barrel in electronic trading on the New York Mercantile Exchange. Oil investments in the American benchmark have now been rising for two consecutive trading sessions, with futures settling at $93.88 per barrel yesterday.

Brent crude oil futures for February settlement rose 29 cents to $103.64 per barrel on the ICE Futures Exchange in London.

Crude oil futures received further support on the charts after the latest reports from the U.S. Energy Department showed more than 2 million barrels’ worth of declines in the nation’s stockpiles.

The capital of Kazakhstan was flooded with protesters, as demonstrations stretched into their third day. The protests were incited by the firing of oil rig labourers in the nation’s key supplier towns. The operations of Eni, a prolific Italian crude oil and gas firm stationed in Kazakhstan have not been affected by the unrest as of yet.

Officials from Iran issued an announcement earlier today, stating that crude oil output efforts in the OPEC nation have abated due a severe drop in oil investments in its fields. The decline in trader demand comes at the hand of the extensive sanctions that the Western powers have imposed on the country due to its questionable nuclear ambitions.

The previously troubled crude oil commodity also had underlying support on the commodity index due to Libya’s plans to delay its full return to the sector by at least one month, as its key processing plants are still cut off from a constant stream of the fuel. Though the U.S. does not depend on Iran in its crude oil needs, the OPEC supplier nation controls some of the most vital exporting routes in the Middle East, and the cast majority of the European bloc directly depends on its product. If prolonged disruptions in Iran’s crude output continue, there is no question that global economy will suffer accordingly.

Yesterday’s conference call held between the finance ministers of the debt-addled euro zone resulted in yet another agreement by the region’s heads to boost its floundering bailout fund and tighten up excessive spending. Though, the bloc focused its attention on securing financial aid from its geo-political allies, it is still less than clear whether the region will be able to come up with the 200 billion euros estimated for the strategy to potentially succeed. With Britain now firmly uninvolved in the whole process, Europe may be left to falter without one of its closest economic ties.

Oil investments face some potential obstacles in the face of the death of North Korean leader Kim Jong Il. With the despot’s untested son due to take over the country, the global political ramifications that may follow are difficult to predict with any sort of accuracy.

By Chris Termeer