- - Wednesday, December 28, 2011

OIL

Saudis vow to pump more to offset Iran threat

NEW YORK | Oil prices fell in world markets Wednesday, after Saudi Arabia said it will offset any loss of oil from a threatened Iranian blockade of a crucial tanker route in the Middle East.

On Tuesday, Iran’s vice president said his country is ready to close the Strait of Hormuz - a vital waterway that is only 21 miles wide at one point through which a third of the world’s tanker traffic flows - if Western nations embargo the country’s oil because of Iran’s ongoing nuclear program.

A Saudi oil ministry official told the Associated Press on condition of anonymity that Saudi Arabia and other Gulf producers are ready to provide more oil if Iran tries to block the strait. He didn’t specify other routes that could be used to transport oil, although they likely would be longer and more expensive.

In New York, benchmark crude fell $1.98 to finish at $99.36 a barrel. Brent crude fell $1.71 to end at $107.56 a barrel in London.

EUROPE

Italy sells debt cheaply in sign of confidence

ROME | Strong demand for short-term Italian government debt on Wednesday pushed the country’s borrowing costs lower and suggested investors have become less jittery about an imminent default by the eurozone’s third-largest economy.

Italy raised $14 billion in a pair of auctions at sharply lower rates than those it was forced to pay just a month ago when investor concerns about the ability of the country to service its massive debts became particularly acute and effectively prompted a change in government.

The Bank of Italy said the average yield on its $11.8 billion six-month offering was 3.251 percent, half the 6.504 percent rate it had to pay at the equivalent auction last month. An auction of two-year bonds, which raised $2.2 billion, also saw the yield fall to 4.853 percent from 7.814 percent last month.

The sharp decline in Italy’s borrowing costs could be a signal of both greater investor confidence in the country and the use by commercial eurozone banks of the money they tapped from emergency loans from the European Central Bank last week.

ENERGY

Cypriot president touts offshore gas find

NICOSIA, Cyprus | A field off Cyprus where U.S. firm Noble Energy is conducting exploratory drilling holds an estimated 5 trillion to 8 trillion cubic feet of natural gas, an amount that could meet all of the small island’s energy needs for decades, the country’s president announced Wednesday.

President Dimitris Christofias said the offshore discovery is attracting the interest of many foreign investors and is enabling the European Union member to contribute to the bloc’s energy security. But it also could risk heightening tensions with rival Turkey.

“The discovery of hydrocarbons constitutes a historic development for our country and our people, filling us all with feelings of optimism for the future,” Mr. Christofias said in a televised address.

The site is some 115 miles south of the eastern Mediterranean island near a huge Israeli gas field being jointly developed by Noble Energy and Israeli energy company Delek, that is estimated at 17 trillion cubic feet.

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