Brent crude oil held above USD 110 as supply concerns rooted in tension between Iran and the West offset fears over demand growth stemming from protracted negotiations over Greece’s debt.

Mr Barack Obama president of United States said that the US would impose more sanctions after the European Union agreed to ban imports of Iranian crude starting in July.

Iranian politicians responded to the EU embargo deal with a renewed threat to block the Strait of Hormuz, a crucial oil chokepoint if Iran’s exports were blocked and suggested halting oil sales to Europe immediately as punishment.

Front month Brent crude traded at USD 110.50 per barrel by 0920 GMT down 8 cents. US crude was up about 12 cents at USD 99.70 having closed above the 50 day moving average of USD 99.13.

Mr Carsten Fritsch a commodities analyst at Commerzbank said that “Yesterday’s announcement by the EU regarding an oil embargo against Iran failed to lift prices since it was well expected and pre-announced in advance.”

He said that “There’s still some risk regarding threats to close the Strait of Hormuz or threats from Iran to stop oil exports to the EU immediately. But it seems like the market doesn’t believe Iran will do so given its dependence on oil revenues.”

Mr Natalie Robertson an analyst at ANZ said that “Tensions in the Middle East have added USD 5 to USD 10 risk premium on oil prices. Higher prices run the risk of derailing the nascent recovery we are seeing in the United States.”

(Sourced from www.thenews.com.pk)