Notwithstanding overhangs in Greece and Italy, crude oil prices climbed higher in European session with the benchmark crude contract rising to as high as 96.6 and the equivalent Brent crude contract advancing to 116.06. The White House said that the IAEA will issue a report showing Iran is going towards developing nuclear weapons. This has intensified geopolitical tensions between the Middle East country and the West. Potential sanction from the UN will definitely hurt oil supply to the world. Gold remained firm at around 1790 as renewed demand for safe-haven asset drove capital to the yellow metal.
White House spokesman Jay Carney said that a report by the IAEA later in the week will 'echo and reinforce' what has been saying about 'Iran's behavior and its failure to live up to its international obligations', that is Iran is continuing with its nuclear program. While Carney has downplayed the possibility of military action, geopolitical tensions have escalated and sanctions against Iran cannot be ruled out if the country refuses to comply with international obligations.
As a member in the OPEC, Iran is the cartel's second largest oil producer and the
world's fourth-largest crude oil exporter. The country's major export destinations are Asian countries such as China, India and Japan. Exports to European countries contributed to 20% to Iran's total oil shipment. The impact of a suspension in oil supply from Iran at the current situation is exacerbated by that fact that Libyan oil output is only at the stage of gradual recovery.
On the dataflow, manufacturing activities in the UK remained weak. Manufacturing production climbed +0.2% m/m higher in September after contracting -0.3% a month ago. From a year ago, the reading increased +2.0% while the August reading was revised higher to +1.6%. However, industrial production stayed flat in September on monthly basis and dipped -0.7% on annual basis. The National Institute of Economic and Social Research (NIESR) will report its GDP growth forecast for the UK. The agency estimated the country's economic grew +0.5% in the 3 months through September.