Oil Price Increased as Greece Stays Away from Huge Debt Default

Oil prices recently increased following Greece’s major move to steer clear from a huge debt default that can damage the economy of Europe and lower oil demand.

Moreover, crude oil prices strengthened due to renewed tensions regarding Iranian oil inventories following the decision of several shipping companies to cease loading Iranian oil onto tankers due to pending European and U.S. sanctions versus Iran.

In New York, the recent Benchmark oil prices grew by 2.3% or $2.24 per barrel to end at $100.91. In London, Brent crude prices increased by 64 cents to finish at $117.30 a barrel.

Lawmakers in Greece recently approved huge expense cuts required for the nation to obtain additional bailout budget and prevent a massive debt default. Leaders of Europe will convene soon to talk about providing Greece with more money. Without a negotiation, Greece experiences severe bankruptcy that can affect the bigger economy of Europe and can result in weak oil demand.

In the meantime, shipping companies have stopped receiving Iranian oil shipments due to sanctions of Europe and U.S. that will begin to take effect in the coming months. Both countries seeks to remove Iran’s needed oil income to pay for a program that they think is aimed at building nuclear weapons.

Jonathan Chappell, shipping analyst of Evercore Partners, does not think that the shipping companies’ actions will heavily impact global oil prices since Iran can turn to countries like China and India instead.

Heating oil prices dropped by $0.02 to end at $3.16/gallon. Futures of gasoline increased by $0.04 to finish at $3.01 per gallon. Natural gas reduced by $0.05 to close at $2.43 to each 1,000 cubic feet.

At gasoline stations, the national average of one gallon of gasoline recently increased by less than a cent to $3.51 said the Wright Express, AAA and Oil Price Information Service. That amount is 12 cents higher that last month and 38 cents greater than the previous year.