Oil, Gasoline Futures Fall Sharply

By GEORGE JAHN

VIENNA, Austria – Energy futures prices fell sharply Monday as concerns over Iran’s nuclear ambitions eased with an announcement by the Islamic republic and Russia that they would establish a joint uranium enrichment venture.

Also, Saudi security forces shot and killed five militants the government said Monday were suspects in Friday’s foiled suicide bombing of a huge oil processing complex in the kingdom’s east.

Still, analysts suggested that – although markets were well supplied – the potential for political instability or violence in key producing nations was limiting the price decline.

Light sweet crude for April delivery on the New York Mercantile Exchange fell $1.76 to $61.15 a barrel. April Brent crude futures on London’s ICE Futures exchange fell $1.20 to $61.40 a barrel.

Gasoline futures slid by more than 6 cents to $1.49 a gallon, while heating oil futures fell by a nickel to $1.677 a gallon. Natural gas futures declined more than 53 cents cents to $6.78 per 1,000 cubic feet, pushed lower by short-term forecasts in the U.S. calling for milder temperatures.

On Sunday, Iran and Russia agreed in principle to establish a joint uranium enrichment venture, a breakthrough in talks on a U.S.-backed Kremlin proposal aimed at easing concerns that Tehran wants to build nuclear weapons.

But further negotiations on the details lay ahead, and it was not known whether Iran will entirely give up enrichment at home, a top demand of the West.

The deal – announced by the two countries’ top nuclear chiefs – could deflect any move by the U.N. nuclear watchdog agency at a March 6 meeting to recommend the U.N. Security Council consider action on Iran.

Iran is OPEC’s No. 2 oil producer behind Saudi Arabia, and worries that a nuclear standoff could affect Iran’s oil output has lifted crude prices in recent weeks.

Iran’s deputy nuclear chief, Mohammad Saeedi, warned that the deal would be off if the International Atomic Energy Agency refers Iran to the Security Council, a step that could lead to sanctions.

The United States accuses Iran of seeking to develop nuclear weapons but has backed the proposal if it means enrichment would take place entirely in Russia. Iran denies any intention to build weapons, saying it aims only to produce nuclear energy.

On Friday, the benchmark contract gained $2.37 a barrel after a thwarted attack by suicide bombers in explosives-packed cars on a massive oil facility in Saudi Arabia heightened supply fears.

Saudi Arabia is the world’s largest oil producer, with output of about 9.5 million barrels per day, or 11 percent of global consumption. The target of the attack, the Abqaiq oil complex in eastern Saudi Arabia, processes about two-thirds of the country’s oil before it is exported.

Vienna’s PVM Oil Associates identified the “sheer psychological impact” of potential unrest or instability as a major factor in oil and energy markets.

“More than a third of the global oil supply … (is) prone to uncertainties,” it said, listing Iraq, Nigeria, Iran, Russia, Venezuela, Colombia and Ecuador and Saudi Arabia as nations either affected or at risk.