Daily Commodities Analysis: Oil and Gold

 | Jan 13, 2012 08:18AM ET

CL2G

Oil dropped the most in two weeks after a proposed European Union embargo of Iranian oil imports was said likely to be delayed for six months.  Crude fell 1.8 percent on the postponement that will allow countries such as Greece, Italy and Spain to find alternative supplies. Futures surged above $103 a barrel this month to the highest level since May as Iran threatened to block the Strait of Hormuz if an embargo was imposed.  Crude for February delivery tumbled $1.77 to settle at $99.10 a barrel on the New York Mercantile Exchange. Prices have risen 7.9 percent in the past year. Futures declined 2.1 percent in eight minutes on the EU-Iran news, reversing an earlier gain. Oil continued to fall in electronic trading after the Nymex settlement in New York and touched $98.50 a barrel, the lowest intraday price since Dec. 29. The embargo which supposedly needs to be agreed to by the 27 nation-bloc’s foreign ministers on Jan. 23 is also likely to include an exemption for Italy, so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), Italy’s largest oil company. A ban on petrochemical products would start sooner about three months after ministers agree to the measure. The phasing-in of the embargoes would satisfy the concerns of countries with the largest dependence on Iranian oil, including Italy, Greece and Spain, the official said. Those three countries accounted for 68.5 percent of EU imports from Iran in 2010. France, Germany and the U.K. have been pushing for the embargo to increase pressure on Iran over its nuclear program and it has the support in principle of all 27 member states.