Brent edged above 110 USD per barrel (USD/bbl) on Monday after rumours that the EU diplomats agreed on a ban on Iranian crude imports to Europe. The rumours were confirmed in the afternoon and Brent closed above the mentioned level.
The EU ministers agreed on a full implementation of the ban as of 1st July as Greece withdrew its demand for longer grace period. After the decision, Iran turned back to sabre-rattling and deputy-head of parliament’s foreign affairs commission said if a disruption occurred Iran would definitely close the Straits of Hormuz. Although we believe that further escalation of the rhetoric is possible, we do not expect either side to use weapons. Moreover, both sides (Iran and the western countries) have claimed they had been ready to resume negotiations. In this respect, the International Atomic Energy Agency said yesterday it would send its top team to Teheran on Sunday to “resolve all outstanding substantive issues”.
Let us remind that Saudi Arabia’s officials have earlier promised the country would pump more oil if needed. However, finding crude with the proper quality might be difficult. At the time of writing, Brent is trading at 110.20 USD/bbl.
Precious Metals
Gold posted little gains on Monday and closed above 1670 USD per troy ounce (USD/toz). According to the World Gold Council’s report, central bank’s purchases of gold are expected to hit yet another record in 2011. The report (containing data to November) showed that the most active buyer of gold was Mexico which purchased about 100
tonnes of the yellow metal, followed by Russia (65 tonnes). However, by far the largest holder of the metal remains the U.S. central bank, which holds about 8 thousand tonnes of gold.