Oil futures climbed Tuesday as tensions between Iran and the West continued to escalate, while U.S. equities opened higher. Light, sweet crude for February delivery rose $1.42, or 1.4%, to $102.74 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe added 74 cents, or 0.7%, to $113.19 a barrel.
The International Atomic Energy Agency late Monday confirmed that Iran has begun enriching uranium at a new site deep in the mountains near the city of Qom. The news marked the latest escalation of the row over Iran’s nuclear program, and follows threats from Iran to close the Strait of Hormuz, the waterway through which about a third of the world’s sea-borne crude passes.
Oil market participants have been closely following events between Iran and the West in recent months, after the IAEA accused the country late last year of taking significant steps toward developing a nuclear weapon.
The U.S. has responded with fresh sanctions against Iran’s central bank, which processes the country’s oil revenue. The European Union, a major importer of Iranian crude, is expected to discuss an oil import ban at a summit later this month.
The tensions have been a key factor keeping Nymex crude above $100 a barrel over the last week, despite persistent worries about Europe’s sovereign debt crisis and continued economic weakness in the U.S.
Separately, strong equity markets also helped to buoy crude prices. U.S. stocks opened higher Tuesday as investors looked to a strong earnings season. European markets also rallied. The Dow Jones Industrial Average recently advanced 96 points to 12489, helped by a strong revenue report from aluminum producer Alcoa. Oil futures have closely tracked equities in recent months, as traders look to financial markets for guidance about the broader economic outlook.
EasyForexNews Research Team