Oil jumped above $86 a barrel Monday in Asia after a rescue package for Spain’s banks revived hopes of steady oil demand growth, A warning from Iran that negotiations over its nuclear program could stall also helped raise oil prices.
The larger-than-expected rescue package calmed some of the fears in financial markets over Europe’s debt crisis, boosting Asian shares, the euro and base metals. Yet, investors expect volatility as the global economy remains fragile with uncertainty surrounding growth in the world’s top economies.
“There was a big gain after the announcement of the relief for Spanish banks as some of the uncertainty in Europe is disappearing,” said Tetsu Emori, a commodity fund manager at Astmax Co. Ltd. in Tokyo. “It seems China trade is getting healthy again. That’s pushing up oil and commodity prices.”
Benchmark oil for July delivery was up $2.00 to $86.10 per barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
In London, Brent crude for July delivery was up $2.09 at $100.56 per barrel on the ICE Futures exchange.
The Spanish bail-out package, which was agreed over the weekend, marked a dramatic climbdown for Madrid, which had denied any need for outside aid to prop up its troubled lenders.
Despite the bail-out, Phillip Futures said in a report that Spanish concerns as well as upcoming elections in debt-ravaged Greece would be the predominant factors moving crude markets this week.
Supply disruption fears also aided oil after talks failed between the U.N. nuclear watchdog and key oil producer Iran to unblock a probe into suspected atom bomb research by Tehran.
The International Atomic Energy Agency said no progress had been made in the Friday meeting aimed at sealing a deal on resuming the IAEA’s long-stalled investigation.
Iran and six world powers are scheduled for talks in Moscow on June 18.
Iran says it is developing a nuclear program for peaceful purposes. In exchange for discussing enrichment, Iran wants the West to ease sanctions which have made exporting its crude more difficult.