BANGKOK ? Oil prices hovered near $99 a barrel Wednesday, a day after Australia announced it was joining a boycott by Western nations against Iran, the world's No. 3 oil exporter, over a suspected nuclear weapons program.
Benchmark crude for March delivery was down 6 cents to $98.89 per barrel in the late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 63 cents to end at $98.95 in New York on Tuesday.
Brent crude for March delivery was up 31 cents at $110.34 a barrel on the ICE Futures Exchange in London.
Australian Foreign Minister Kevin Rudd announced Tuesday during a trip to London that his government had decided to follow the European Union, which announced Monday it would ban the import of Iranian crude starting in July.
The initiative to use oil to force Iran back to nuclear talks began last month, when the U.S. enacted new sanctions targeting Iran's central bank and its ability to sell petroleum abroad. The U.S. doesn't buy Iranian oil, but the new sanctions make it harder for Iran to sell crude.
Asian countries, already Iran's biggest customers, aren't joining the Europeans in banning Iranian crude. The move has been harshly criticized by oil-ravenous China, which is believed likely to sop up any excess Iranian crude at advantageous prices.
Meanwhile, analysts said that oil prices, amid expectations of tightening supplies, would remain somewhat elevated until the dust settles.
"There are other nations that will be boycotting Iran. That is probably adjusting market expectations of tighter supplies," said Natalie Robertson, a commodities analyst with ANZ Banking Group in Melbourne.
"There is going to be a rebalancing. Iran will have to find new customers for its crude since its usual customers are cutting down imports. During that period, there is going to be some time while the market adjusts to the imbalances, and that is what is keeping prices supported."
In other energy trading, heating oil rose 0.8 cent to $3.02 per gallon and gasoline futures were up 0.7 cent at $2.82 per gallon. Natural gas rose 5.5 cents to $2.61 per 1,000 cubic feet.
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