Oil rose to $115 a barrel today as concerns over stability in the Middle East began hitting the headlines. The Israeli media has been reporting on a leak from their government which suggests attacks on Iranian nuclear facilities are imminent. The jump in price represents a new three month high for Brent Crude Oil, which is considered to be the highest quality available. Fresh concerns over the shortage in the North Sea of Crude supplies are also contributing.
Concerns did ease later in the day as ‘experts’ began appearing in the western media claiming that the likelihood of an attack was minimal. The price fell to 113.60 per barrel by the close of the markets, representing a rise of 65 cents. The BFOE (Brent, Forties, Oseberg & Ekofisk) oil output is a benchmark consisting of the four major crude oil streams. Next month it is expected to create 720,000 barrels per day, 54,000 barrels a day less than its current daily average – which is already a stretched supply.
With backwardation now effecting the oil industry to an extent not seen since the Libyan conflicts of 2011 the current sanctions placed on Iran by the UN, EU and US are being felt more than ever. In 2011 Iran was producing more than 4.1million barrels of oil per day, which would be enough to drastically reduce the currently inflated oil prices back down to a manageable level. The Iranians have recently dropped their production levels as they are struggling to export their products.
Italy Sells €8bn in Bonds
Italy has auctioned off €8bn in one-year bonds. The debt ridden country announced the results of the auction in Rome, which sends a major signal of intent to the rest of the Eurozone. By auctioning off the bonds Rome has shown an eagerness to get out of their current situation without the need for a “full bailout”, which would require a formal request sent to the European Central Bank and the agreement of all 17 nations who use the Euro. Any such bailout would come with very strict terms and conditions, which is discouraging both the Italians and Spanish from making such a request at this time. Neither country wishes to commit themselves to a programme that would force measures on their country that would detract from their way of life or standard of living.