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SINGAPORE, Jan 5 (Reuters) - Oil jumped more than 3 percent
on Monday after an Iranian military commander reportedly called
for an oil boycott over Israel's ground offensive in the Gaza
Strip and on concerns over the deepening Russian gas supply
row.
Wall Street's strong start to the new year on Friday and
mounting evidence of OPEC's compliance with deep production
cuts also helped oil to a third day of strong gains, driving
prices to their highest in over two weeks.
U.S. light, sweet crude for February delivery <CLG9> rose
$1.47 a barrel to $47.81 by 2330 GMT, with some traders
beginning to reckon that the over $110 slump in prices from
their $147 record high last July had been overdone.
"The Gaza conflict added to the geo-political risk
premium...in the oil price," Commonwealth Bank of Australia
analyst David Moore said in a note. "Oil markets may also have
a sense that the implementation of earlier announced production
cuts by OPEC countries will ultimately tighten oil supplies."
Israeli troops and tanks split the Gaza Strip and ringed
its main city on Sunday in an offensive against Hamas that has
killed 500 Palestinians, including a growing number of
civilians.
Israeli tanks poured shells and machinegun-fire into
suspected militant positions and war planes struck as Hamas
fighters fought back with mortars and rockets.
While the violence does not directly threaten any oil
supplies, the risk is it could engulf other Middle East
countries that produce a third of the world's crude, with No. 4
oil producer and OPEC member Iran typically the most vocal.
An Iranian military commander called on Islamic countries
to cut oil exports to Israel's supporters in response to the
offensive in Gaza, the official IRNA news agency reported.
"Pointing at Westerners' dependence on the Islamic
countries' oil and energy resources, he (Bagherzadeh) called
for cutting the export of crude oil to the Zionist regime's
supporters the world over," IRNA said, referring to Israel.
[]
IRNA gave only the commander's last name but it may have
been referring to Mirfeysal Bagherzadeh, a brigadier-general of
Iran's elite Revolutionary Guards.
There was no immediate comment from other Iranian
officials, and many analysts doubted whether Tehran would be
prepared to follow words with action, or whether other
countries with closer ties to the West would be willing to
follow.
"You would expect hardliners to issue such words but as a
practical policy I don't think it would be very effective,"
independent analyst Mehdi Varzi said.
Adding to geopolitical concerns, Russian natural gas
supplies fell by five percent to the Czech Republic as a result
of Russia's stand-off with Ukraine over gas prices, which began
on New Year's day. The two sides blame each other for the
dispute.
European energy firms, which received about a fifth of
their gas via pipelines through Ukraine, said they had enough
gas stockpiled to maintain supplies for several days, but
analysts said Europe could face problems if the row dragged on.
The gas row, which mirrors a similar dispute three years
ago that also disrupted supplies, is likely to raise new
questions in Europe about Russia's reliability as a gas
supplier.
(Reporting by Jonathan Leff; Editing by Anshuman Daga)
