Oil rises above $101 as Middle East tensions rise

February 15, 2012 - 5:05 PM

BANGKOK (AP) — Oil rose above $101 a barrel Wednesday in Asia as escalating tensions in the Middle East outweighed lingering concerns about Greece's ability to implement austerity measures to resolve its debt crisis.

Benchmark crude was up 80 cents to $101.55 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 17 cents to finish at $100.74 per barrel in New York on Tuesday.

Brent crude was up 80 cents at $118.15 per barrel in London.

Analysts of fears of a disruption in oil supplies were a result of expectations that Iranian President Mahmoud Ahmadinejad will unveil new nuclear projects shortly. The U.S. and its allies accuse Iran of seeking nuclear weapons, a charge Tehran denies.

"I think the market is grappling between the softer demand outlook versus this ... situation we are seeing in the Middle East," said Natalie Robertson, a commodities analyst at ANZ Banking Group in Melbourne, Australia.

Also sending supply concerns higher was a vigorous spat between Israel and Iran following a bomb attack on an Israeli diplomatic target in India and a foiled attack in Georgia, said Robertson.

Israel has accused Iran of waging a covert campaign of state terror that stretched this week to the heart of Asia after a bungled series of explosions led to the capture of two Iranian nationals in the Thai capital Bangkok.

Still, energy trader and consultant The Schork Group said in a report that it continues to think oil prices will fall due to caution in the U.S. at the gas pump after a report showed January retail sales grew only modestly.

"Consumers are spending, but with higher food prices and new iPhones to buy, they are not spending at the pump," Schork said.

Greek lawmakers, meanwhile, have passed a package of spending cuts to try to win approval for a second bailout loan that is urgently needed to prevent a default on the country's debts.

But European finance ministers canceled a meeting to discuss that funding after Greece, which is already struggling from five years of recession, failed to comply with numerous demands.

If no deal is reached, Athens will careen toward bankruptcy — posing a risk to Europe's already sluggish economy.

In other energy trading, heating oil was up 2 cents at $3.19 per gallon and gasoline futures fell 3 cents to $2.98 per gallon. Natural gas rose 1 cent to $2.55 per 1,000 cubic feet.