Base metal prices traded lower last week driven down, according to ForexPros, by continued uncertainty over the Euro Zone debt crisis, while crude oil prices increased due to the tensions with Iran.
Copper declined around 0.2% on the London Metal Exchange (LME) as well as on the Multi Commodity Exchange (MCX) on Thursday. A sharp downslide on the international markets was prevented on the back of drop in the metal’s LME inventories coupled with a weaker dollar.
Nickel prices declined by more than 1% on the LME on Thursday. The metal touched an intra-day low of $19,764/tonne and closed at the level of $19,990/tonne on Thursday.
Crude oil prices closed higher on Thursday by 0.5% on the New York Mercantile Exchange (NYMEX) and around 1% on the MCX. With positive economic data released from the US coupled with building tensions over Iran supported upside in the commodity.
On 15th Feb’12, Iran said that it would cut crude shipments to France and the Netherlands and has now has stopped selling crude to Britain in a retaliation against the recent EU sanctions.
“Exporting crude to British and French companies has been stopped… we will sell our oil to new customers,” spokesman Alireza Nikzad was quoted as saying by the ministry of petroleum website.
The European Union in January decided to stop importing crude from Iran from July 1 over its disputed nuclear program. Iran’s oil minister said on February 4 that it would cut its oil exports to some European countries.
The European Commission said last week that the bloc would not be short of oil if Iran stopped crude exports, as they have enough in stock to meet their needs for around 120 days.
France’s Total has already stopped buying Iran’s crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell has scaled back sharply. Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption. Iran was supplying more than 700,000 barrels per day to the EU plus Turkey in 2011, industry sources said.
Alongside, tensions over supply disruptions rise as the EU has announced last month that it will halt purchases of crude oil from Iran beginning July 1. But at the same time, to ease fears and worries over supply, Saudi Arabian Oil Co. plans to re-open its Damman oilfield and start production there for the first time in 30 years.
According to the Australian Broadcasting Commission, supplies of crude oil from Iran to India may face hurdles as shipping companies may refuse to carry the country’s oil because they may not get international insurance cover following European Union sanctions against Iran announced on 23rd Jan’12.
It is known that Indian shipping companies take protection and indemnity cover (P&I) mainly from European P&I clubs, which have informed these companies that they may withdraw protection once the European sanctions get implemented.