The price of oil futures has been suppressed by an indicated delay in sanctions on Iran which would effectively ban Iranian oil, as the EU seeks to offer a six month timetable for members to establish alternative sources of fuel.
The market for oil futures suffered its worst trading week of 2012 so far following an indication from senior EU officials that suggest a ban on Iranian oil could be delayed for a further six months in order to prevent supply issues.
Futures were down over 2.3% on the week after an official was reported to have announced an extension to the timetable for the Iranian oil ban in order to alleviate any potential bottlenecks and afford more time for member states to source alternative fuel providers before the ban comes into effect. It is also forecast to contain exemption for the Italian oil giant Eni SpA which is paying down significant debts
However, analysts at Goldman Sachs amongst others have forecast 2012 to be a year of growing prices in the oil markets, as ongoing supply fears amongst key producers and a shortage of additional marginal capacity look set to drive up prices.
Furthermore, the potential for further difficulties in the middle East and in particular around the Strait of Hormuz could cause a sharp jump in prices in both futures and underlying markets, with Goldman Sachs suggesting $200 a barrel as a distinct possibility.
While the Iranian supply issue will eventually cause rising prices, analysts have suggested Saudi Arabia may be able to increase its output in order to meet with the capacity needs of European economies.
Oil futures have seen week trading through the week, alongside most other commodities which have been kept low as a result of ongoing uncertainty of the Eurozone picture