oil - Bloomberg - December 27 2010
Oil prices had the highest jump in eight weeks after Netanyahu's U.N. speech yesterday. Photo by Bloomberg
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Crude oil prices rose 2.1 percent to $91.85 a barrel on Thursday, the sharpest jump in eight weeks, the day Prime Minister Benjamin Netanyahu's speech at the United Nations raised concerns over escalating tensions between Israel and Iran.

The Spanish government's approval of budget cuts and the expectation that China's central bank will inject greater liquidity into China's financial system also helped alleviate floating anxieties in world markets, which pushed oil prices upwards.

During his speech yesterday before the U.N. General Assembly, Netanyahu called for a clear red line to halt the development of Iran's nuclear weapons program.

"The relevant question is not when Iran will get the bomb," said the prime minister. "The relevant question is at what stage we can no longer stop Iran from getting the bomb.

"I believe that faced with a clear red line, Iran will back down,” he continued. “This will give more time for sanctions and diplomacy to convince Iran to dismantle its nuclear weapons program altogether."

Netanyahu later added, "Red lines don’t lead to war; red lines prevent war. In fact, it’s the failure to place red lines that has often invited aggression."

Addressing the General Assembly, the prime minister emphasized the urgency for action.

"By next spring, at most by next summer, at current enrichment rates, the [Iranians] will have finished the medium enrichment and moved on to the final stage," he said. "From there, it’s only a few months, possibly a few weeks, before they get enough enriched uranium for the first bomb.

"What I told you now is not based on secret information,” Netanyahu continued. “It’s not based on military intelligence. It’s based on public reports by the International Atomic Energy Agency. Anybody can read them. They’re online."

“This ratcheting up of rhetoric brought the focus of the oil market back to oil supply concerns,” said Summit Energy analyst Matt Smith in an interview with the financial news site Marketwatch.

Crude futures for November delivery rose 2.1 percent yesterday to close at a price of $91.85 a barrel on the New York Mercantile Exchange.