Oil jumps on Iran tension


Crude oil prices jumped Tuesday as rising Iran tension caused supply fears.

Iran was again threatening to block a critical shipping route in response to a European embargo of Iranian oil.

Iranian lawmakers on Monday drafted a bill calling for Iran to stop tankers shipping oil to supporters of U.S.-led sanctions and the European Union embargo from passing the Strait of Hormuz.

The Strait of Hormuz, under control of Iran, is the important waterway for oil export from the Middle East, carrying about one fifth of global oil output to the rest of the world.

The EU embargo on Iranian oil took full effect on Sunday after the latest talks over Iran's disputed nuclear program between Tehran and six major world powers all ended up with nothing positive.

Supply fears worsened after Iran on Tuesday claimed it had successfully tested missiles capable of hitting Israel in response to threats of military action against it.

Iranian nuclear tension had been the supporting power for the oil price rise earlier this year, which sent U.S. crude benchmark to the high of 110 dollars a barrel. Analysts said after several months of peace, the returning tension would continue to push crude prices higher.

The recent weak global data also generated hopes among investors for another round of quantitative easing. Boosted by the hopes, equities also rose.

On the economic front, U.S. new factory orders rose 0.7 percent in May according to the Commerce Department, stronger than economists had forecasted.

The U.S. crude market will be closed on Wednesday due to the Independence Day holiday.

Light, sweet crude for August delivery soared 3.91 dollars, or 4.67 percent, to settle at 87.66 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude for August delivery also surged and returned above 100 dollars a barrel for the first time since June 1.


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