Oil ticks down as violent Iran clashes fail to disrupt supplies
Oil dropped from a 30-month high after days of civil unrest in Iran failed to interrupt supplies from OPEC's third-biggest crude producer.
Futures declined 0.3 percent in New York. Even as the death toll mounted in Iran amid violent clashes between security forces and protesters, the nation's petroleum exports have yet to be impacted, according to tanker-tracking data compiled by Bloomberg. Last week's 3.3 percent advance in the U.S. oil benchmark capped a 12 percent gain for 2017 as a OPEC and Russia cooperated to curb a worldwide glut.
"The market wants to see if the tension actually leads to disruption," said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Oil rose in New York last year as the Organization of Petroleum Exporting Countries and its allies trimmed supplies. U.S. crude output has also slipped from a record high, with weekly production falling through Dec. 22 for the first time since mid-October. Any interruption to Iranian supply would be a significant shock to the market.
West Texas Intermediate for February delivery was down 19 cents to $60.23 a barrel at 11:37 a.m. on the New York Mercantile Exchange. In earlier trading, the contract touched $60.74, the highest intraday level since June 2015. Total volume traded was about 24 percent below the 100-day average.
Brent for March settlement fell 49 cents to $66.38 on the London-based ICE Futures Europe exchange, and traded at a premium of $6.13 to WTI for the same month. The global benchmark crude rose about 18 percent last year for a second annual increase.
Though the Iranian unrest that began Thursday in the northeastern city of Mashhad initially targeted the government's handling of the economy, the focus expanded within a day to the religious establishment and state security forces. Accounts varied, but as many as a dozen people may have died.
"I would not be surprised if any outcome of the current crisis would be ultimately negative for the oil price," said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. "Should the protests lead to regime change, it might attract massive new investments and result in higher output."
Under current conditions, prices this year may remain largely range-bound between $40 and $60 a barrel, according to Moody's Investors Service. Prices will be penned in by rising U.S. shale production, declining but still high global supplies and eroding compliance with OPEC-led output cuts, the ratings agency said in a report Tuesday.