Crude oil futures remain close to 9-month high on Iran, Greece

Forexpros - Crude oil futures remained higher on Tuesday, trading close to a nine-month high hit the previous day as tensions between Iran and the West threatened global supply and after euro zone finance ministers agreed on a second bailout for Greece.
 
On the New York Mercantile Exchange, light sweet crude futures for delivery in March traded at USD104.67 a barrel during early U.S. morning trade, gaining 0.72%.

The March contract is due to expire at the end of Tuesday’s trading session. Contract expiration often leads to volatile sessions as market participants look to close out positions or reposition their portfolios.

Meanwhile, the more actively traded contract for April delivery rose 1.32% to trade at USD104.97 a barrel.

There was neither floor trading nor a closing price on the NYMEX Monday because of the U.S. Presidents’ Day holiday. Tuesday’s trades will be booked with yesterday’s electronic transactions for settlement.

On Monday prices spiked to USD105.80, the highest since May 5, after Iran's Ministry of Petroleum said over the weekend the country has halted sales of oil to British and French companies.

The head of Iran’s state oil company said earlier Tuesday that if other European nations continued “hostile acts” it would stop exporting oil to them as well.

The pre-emptive sales embargo by Iran comes in response to tighter sanctions on the country after European Union states agreed in late January to stop importing Iranian crude from July 1.

Growing tensions between Iran and Israel also remain in focus. Iran deployed warplanes and missiles Monday in an "exercise" to protect nuclear sites threatened by possible Israeli attacks, state-run media outlets reported.

There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.

Iran is the world’s third largest oil exporter, after Saudi Arabia and Russia. The threat of a major supply disruption from the country has helped support oil prices in recent weeks.

Meanwhile, oil traders digested the news that euro zone officials had agreed on a second bailout package totaling EUR130 billion for Greece.

At a meeting that lasted into the early of hours of Tuesday, euro zone finance ministers agreed on a EUR130 billion deal slated to reduce Greece's debt to 120.5% of gross domestic product by 2020.

Private-sector creditors also agreed to take a write-down on their bonds of 53.5%, more than the 50% write-down that had been conceded before the meeting, which is expected to cut Greece's debt by EUR107 billion.

However, investors remained cautious amid uncertainty over Greece’s ability to meet the terms of the deal, while other felt the deal was only a short-term fix that falls short of what Greece needs to prevent financial collapse.

The Troika, which is composed of the European Union, European Central Bank and the International Monetary Fund, said in its latest report on Greece's debt sustainability that "additional debt relief" will be required in the future.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery eased up 0.25% to trade at USD120.38 a barrel, with the spread between the Brent and crude contracts standing at USD15.41.