This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Oil Prices Gain on Global Supply Threats

NEW YORK ( TheStreet) -- Oil prices were rebounding Thursday as escalating fears of supply disruptions stemming from mounting Iranian and Nigerian tensions offset a big inventory build in the U.S.

West Texas Intermediate (WTI) light sweet crude oil for February delivery was gaining $1.21 to $102.08 a barrel and Brent crude oil for March delivery was up 94 cents to $113.

This, amid escalating fears that Iran could retaliate against European Union and U.S. sanctions over its nuclear program by closing the crucial Strait of Hormuz. The waterway, nestled between the Persian Gulf and Gulf of Oman, allows the passage of as many as 20 million barrels of crude oil a day on tankers. Meanwhile, sanctions against the Islamic Republic would put a significant dent in world supply as well, as Iran produces roughly 4 million barrels a day of oil.

Specialist intelligence agency Exclusive Analysis says that the probability of a unilateral Israeli strike will increase to over 50% and rising, from the now 10% chance, between about March and June 2012 and onwards if sanctions and Israeli covert disruption operations don't result in Iranian policy change or significant delays to Iran's nuclear program.

Such strikes could lead to a disruption to international shipping, including oil tankers, especially in the Strait of Hormuz, says Exclusive Analysis analysts.

"Israel sees Iran's nuclear program as posing an existential threat," they say in a report. "If neither tougher sanctions nor covert operations succeed in changing Iranian policy or disrupting the programme, Israel is likely to initiate military action, before uranium enrichment is fully established at Fordow."

A sustained attack could lead Iran to declare the Straits of Hormuz closed and to lay down mines to ward off attacks, according to the report.

In Nigeria, the top-producing oil region of Africa, oil workers have been threatening to shutdown oil production amid a nationwide strike of the elimination of fuel subsidies that has resulted in skyrocketing petrol prices.

"Strikes in Nigeria are now causing the shutdown of several oil platforms, so we question whether the bears can really crack $100," says Schork Report energy analyst Hamza Khan.

Global supply fears were overshadowing a big build-up in U.S. crude inventories last week, which had indicated a possible cooling of U.S. demand. Stocks surged by about 5 million barrels in the week ended Jan. 6, which was well above the 1 million barrel decline in crude stocks that analysts surveyed by Platts had been expecting.

Energy stocks were mixed in premarket trading Thursday. BP (BP) was down 0.7% to $43.76; Exxon Mobil (XOM) was down 0.6% to $84.60; Apache (APA) was rising 0.9% to $97.07; Triangle Petroleum (TPLM) was up 0.4% to $7.07; ConocoPhillips (COP) was down 0.8% to $71.41; Royal Dutch Shell (RDS.A) was giving up 2.1% to $70.21; and Statoil (STO) was rising 1% to $25.52.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.
Copyright 2011 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
APC $35.68 -4.57%
CVX $82.99 -0.06%
MRO $7.06 -0.98%
SU $21.12 -0.47%
AAPL $93.70 -0.60%


Chart of I:DJI
DOW 15,660.18 -254.56 -1.60%
S&P 500 1,829.08 -22.78 -1.23%
NASDAQ 4,266.8370 -16.7550 -0.39%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs