London, 17 February 2012

Greater risk appetite in the light of hopes of financial assistance for Greece coupled with the Iran crisis have caused Brent to climb to an 8-month high of over $120 a barrel. Admittedly, Iran has denied reports of an immediate ban on oil shipments to the EU, yet consumers in Europe already appear to be preparing themselves for just such an eventuality.

Commerzbank Commodity Research: According to industry sources, the leading European oil companies have slashed their March oil imports from Iran by more than 300 thousand barrels per day. This is prompting additional demand for alternative oil types and is thus causing prices to rise.

On the other hand, China and Iran would appear to have resolved their dispute over payment terms for oil shipments in 2012, which had resulted in a marked reduction in Chinese oil imports since the beginning of the year. China could therefore soon start importing more oil from Iran again, which would ease the supply situation. In any case we certainly cannot talk of there being any real shortage of supply on the oil market.

According to consultant firm Oil Movements, OPEC shipments will even climb 170 thousand to 23.38 million barrels per day in the four weeks to 3 March, primarily on the back of increasing supply from Libya. For as long as there are serious concerns about supply shortfalls and while optimism continues on the financial markets, the oil price is likely to continue to rise, especially since even investors with a short-term view will no doubt want to jump on the bandwagon now that the $120 mark has been exceeded.

Ends --

Commerzbank Commodity Research

www.commerzbank.com