Rescue Package for Spain and Failure of Iran Talks led to Crude Oil Price Increase

In the early parts of the latest Asian trading, crude oil prices increased by $2 after the agreement of finance ministers in the euro zone to a bailout amounting to a maximum of 100 Bn euros, or $125 billion, for the banks of Spain and after talks between Iran and the United States failed.

The rescue package intended for Spain was bigger than expected, easing some worries among investors over the debt crisis of Europe. The help was announced as the region’s milestone by the G7, an international organization comprising the world’s 7 largest economies.

Brent crude prices increased to a maximum of $101.59 per barrel, closing for the day higher by $2 at $101.47. Meanwhile, U.S. current crude oil prices increased to a maximum of $86.15 and was higher by $1.93 at $86.03.

The help package aided in the reversal of the recent losses of oil prices. In the latest trading, Brent crude prices declined by 46 cents to reach $99.47 per barrel a decrease for the second straight day. U.S. crude prices had declined by 2 cents.

The nuclear watchdog of the United Nations and Iran failed in the recent discussions to stop an investigation into the Islamic State’s alleged atomic bomb research. This revived worries about the disruption of oil supply and reduced any chance for success of the discussions between Tehran and the major powers that was scheduled for the latter parts of the current month.

The IEA said that there had been no progress in the meeting that was held for the purpose of closing a deal on resuming the long delayed investigation of the agency. Moreover, the IEA said that the result was disappointing.

It happened just several weeks following the statement of Yukiya Amano, nuclear chief of the U.N., who had said he had gained assurances from senior officials of Iran that they will be able to come up with an agreement soon.

By: Chris Termeer