Saudi Arabia fears oil price spike on Iran tension

Saudi Arabia fears oil price spike on Iran tension

Saudi Arabia hopes crude oil prices will not surge higher on tension between Western governments and Tehran over Iran's nuclear programme and that benchmark Brent prices remain near $100 a barrel, a Gulf industry source told Reuters.

January 19, 2012 2:39 by Reuters

Oil prices have risen significantly over the last few weeks on Iranian threats to shut down the Straits of Hormuz – a vital Gulf oil export route – if US and European leaders try to stop the Islamic Republic from selling oil.

The world’s largest oil exporter, which relies on the Hormuz being open to export most of its crude to Asia, hopes oil prices will not rise further.

“Talk of sanctions and other threats puts the price at risk of increasing, so that’s why Saudi said around $100 is fair,” said the Gulf industry source who declined to be named.

In an interview with CNN this week Saudi Oil Minister Ali al-Naimi said $100 a barrel was an ideal oil price for Riyadh.

“This price is just what Saudi hopes for, but in the end the market determines the price,” the source added.

Brent crude was trading at around $111.50 a barrel on Thursday. (Editing by Daniel Fineren) *image from universetoday.com