Forexpros – Crude oil futures were modestly higher on Monday, as ongoing concerns over a disruption to supplies from Iran underlined prices as markets looked forward to a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy later in the day.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD101.81 a barrel during European morning trade, adding 0.25%.
It earlier rose by as much as 0.4% to trade at a session high USD102.14 a barrel.
Oil traders continued to monitor tensions between Iran and the U.S. after Iran’s state-run Fars news agency reported Sunday that the Iranian Revolutionary Guard Corps will hold large-scale exercises in the Strait of Hormuz and the Persian Gulf next month.
The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.
The International Energy Agency said Friday that it could release up to 14 million barrels per day of government-owned oil stored in the U.S., Europe, Japan and other importers, a rate that could be kept up for a month.
Wall Street investment bank Morgan Stanley said that such a release is likely to limit the impact of any blockade of the Strait of Hormuz.
“If the impact is limited to 10 million barrels per day for three weeks, or 210 million barrels, this loss could be easily replaced by an SPR (strategic petroleum reserves) crude release until the Strait is reopened,” the bank said in a report.
Meanwhile, markets were looking forward to a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy later Monday in order to discuss proposals to increase fiscal coordination in the single currency bloc.
Crude’s gains were limited as sentiment remained on the back foot amid concerns over rising borrowing costs in the euro zone, as markets looked ahead to government debt auctions by Spain and Italy later in the week.
Euro zone developments have dominated trading in the oil market for the last several months, amid worries that the sovereign debt crisis could trigger a broader economic slowdown that would curb demand for oil.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 0.43% to trade at USD113.55 a barrel, with the spread between the Brent and crude contracts standing at USD11.74 a barrel.
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