Oil prices recover on Middle East supply concern
2012-05-21 17:34:07
Oil prices recovered from multi-month lows in Asian trade Monday, as concerns over Middle East supply resurfaced, analysts said.
Oil was also supported by Group of Eight (G8) leaders signalling they would look at promoting growth along with austerity measures as a way out of the eurozone's deep debt troubles.
New York's main contract, West Texas Intermediate crude for delivery in June was up 43 cents to $91.91 per barrel while Brent North Sea crude for July gained 65 cents to $107.79 in morning trade.
"The Middle East concerns are coming back into the market, and the upcoming talks between Iran and Western countries is being seen as a crunch point for oil," said Justin Harper, market strategist at IG Markets Singapore.
"The G8's commitment to growth and to keep Greece in the eurozone has also spurred the market," he added.
G8 leaders on Saturday sent a strong message to major producer Iran that tough sanctions imposed over its nuclear programme would be firmly applied, days before the next round of nuclear talks between global powers and Tehran in Baghdad.
Iran faces a raft of sanctions from the United Nations, the United States and the European Union over suspicions that the Islamic republic's nuclear programme masks a push to develop atomic weapons.
Tehran has so far denied the charges, and threatened to blockade the strategic strait of Hormuz if it is faced with further measures.
Meanwhile, market fears over the eurozone's debt troubles were slightly soothed by a broad agreement by the G8 leaders for the bloc to embrace growth measures along with austerity as a way to stave off a major debt contagion.
"The G8 talk of helping global economic growth has helped steady the ship a little in these choppy waters," said Harper.
DBS Bank said however that the G8 statement was "long on promises and short on details" and that attention had now shifted to an EU informal summit on Wednesday.
The G8 club of developed nations is made up of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.