Through the Wire

Crude Rises to Nine-Month High Amid Tension in the Middle East

June 14, 2013
| Energy
| Middle East and North Africa

June 14 (Bloomberg) -- West Texas Intermediate crude climbed to the highest level in nine months on concern that tensions in the Middle East may reduce exports.

Prices headed for a second weekly gain after President Barack Obama was said to authorize lethal military aid to rebel groups in Syria. The U.S. administration said yesterday that it confirmed that Bashar al-Assad’s forces used chemical weapons in the civil war. Iranians go to the polls today to select a replacement for President Mahmoud Ahmadinejad in the world’s fourth-largest oil-reserve holder.

“We are closing the week out and no one really wants to be short crude oil with escalating tension in the Middle East,” said Bill Baruch, a senior market strategist at in Chicago. “The least resistance is higher.”

WTI for July delivery climbed $1.33, or 1.4 percent, to $98.02 a barrel at 9:21 a.m. on the New York Mercantile Exchange. It touched $98.25, the highest level since Sept. 17, in intraday trading. The volume of all futures traded was 67 percent above the 100-day average. Prices are up 2.1 percent this week.

Brent for August settlement increased $1.27, or 1.2 percent, to $106.22 a barrel on the London-based ICE Futures Europe exchange. Volume was 12 percent below the 100-day average for the time of day.

Brent’s premium to WTI for August delivery widened to as much as $8.23 from yesterday’s $7.56 based on July contracts.

Syrian Opposition

President Barack Obama is authorizing the provision of small arms and ammunition to the Syrian opposition under a classified order instructing the Central Intelligence Agency to arrange delivery of the weapons, according to a U.S. official familiar with the decision who asked not to be identified discussing the move.

The decision to arm the opposition was prompted by rebel losses rather than by the U.S. confirmation, announced yesterday, that Assad’s forces had used chemical weapons, according to the official familiar with the move.

Assad has received support from allies including Iran, the sixth-biggest producer in the Organization of Petroleum Exporting Countries.

Opinion polls show Iranian voters want a presidential candidate who will secure an end to sanctions imposed last year to halt the country’s nuclear program. The U.S. and Israel say the Persian Gulf nation is secretly pursuing an atomic weapons capability, while Iran says the program is for civilian energy and medical research.

The Middle East produced a third of the world’s oil in 2012, according to BP Plc’s Statistical Review of World Energy.

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