Tags: Oil | Prices | saudi

Oil Drops on Saudi Assurances, Easing Hormuz Concerns

Tuesday, 20 March 2012 11:06 AM

Brent crude dropped 1 percent on Tuesday as supply concerns eased about a potential Iranian disruption of a key oil choke point and Saudi Arabia signaled it was ready to increase exports to meet the loss of any of shipments from Tehran.

The OPEC kingpin has sought to calm worries that the West's standoff with Iran over its nuclear program could roil global markets, and said late on Monday it would meet any shortfall in supplies and work to return oil prices to fair levels.

U.S. and European sanctions, aimed at ending Iran's nuclear ambitions believed aimed at building bombs, have sent oil prices up 15 percent this year and prompted Tehran to threaten to close the Strait of Hormuz.

Prices eased after Sheikh Sabah al-Ahmad al-Sabah, the ruler of Kuwait, said Iran officials had assured his country that Tehran would not close the Strait, through which 35 percent of global crude sea-borne shipments pass.

The market was also awaiting news from a media conference held by Saudi Arabian Oil Minister Ali al Naimi in Qatar.

U.S. Treasury Secretary Timothy Geithner said the Obama administration welcomed the OPEC kingpin's decision to fill any supply gap created by loss of Iranian crude.

Saudi shipments to the United States have jumped by 25 percent this year and were expected to increase even more in the coming months.

Brent crude fell $1.56 to $124.15 a barrel at 10:59 a.m. EDT, while U.S. crude fell $1.67 to $106.42 a barrel.

Prices pared losses after France and Germany came out in opposition of an emergency release of oil stockpiles.

Sources told Reuters last week that Britain has decided to cooperate with the United States in a bilateral agreement to release stocks, in an effort to prevent high fuel prices derailing economic growth.

© 2019 Thomson/Reuters. All rights reserved.

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Tuesday, 20 March 2012 11:06 AM
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