Global crude oil surge to a three-month high following Iran`s detention of 15 British sailors and the UN`s decision to tighten sanctions against the country that triggered concern that Middle East supplies may be disrupted. Oil prices for May delivery shot up as much as 51 cents to $62.79 a barrel in after-hours electronic trading on the New York Mercantile Exchange, marking the highest since December 26.
The United Nations has given Iran 60 days to halt uranium enrichment and voted to freeze assets of a state-owned bank. On the other hand, U.K. Prime Minister Tony Blair has said that the seizure of the marines in the Persian Gulf was ‘a very serious situation.’ Reacting to the recent development Iran, the world’s fourth-biggest producer of oil, said that it would restrict its co-operation with the UN nuclear watchdog in retaliation for fresh Security Council sanctions over its disputed atomic program.
Iranian President Mahmoud Ahmadinejad apparently unwavering over the dispute said that the latest U.N. sanctions would not halt the country’s uranium enrichment even for a second. The latest developments have renewed market concerns that the world’s fourth-largest oil exporter might cut its oil exports to hit back at the West if the relations continues to be worsening.
Iran is the home of the second-biggest proved oil reserves. In addition to it, around a quarter of the world’s oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf, over which Iran has strategic control. Iran has in the past threatened to close the Straits of Hormuz if attacked by the West, a move that would cut off the world’s supply substantially.
