West's showdown with Iran shoots up oil prices

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Western world’s showdown with Iran over its nuclear programme is creating an unintended effect: jacking up world oil prices.

According to reports, world oil prices hit a new nine-month high on Friday as traders fretted about the impact of heightened geopolitical tensions in crude producer Iran on stretched global supplies.

New York’s main contract, light sweet crude for April, rallied as high as $108.99, touching the highest level since May 2011. It later stood at $108.23, up 40 cents from Thursday’s closing level.

Elsewhere, Brent North Sea crude for delivery in April gained 21 cents to $123.83 per barrel in London afternoon deals. The contract had struck a similar nine-month pinnacle of $124.50 on Thursday.

“Oil prices are continuing to soar on the back of the Iran crisis,” said Commerzbank analyst Carsten Fritsch.

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UN nuclear inspectors returned from Iran on Wednesday with no progress in their search for answers from Tehran on its alleged bid to develop nuclear weapons, leading Washington to brand the trip a “failure”.

Iran has been hit by a raft of economic sanctions by the United States, United Nations and the European Union over its refusal to halt uranium enrichment activities.

The Islamic republic insists that its nuclear programme is solely for peaceful civilian purposes.

Tehran announced last Sunday that it would halt its limited oil sales to Britain and France in retaliation for a phased EU ban on Iranian crude that is yet to take full effect.

The move was largely symbolic, but was seen as a warning shot to other EU nations that are bigger consumers of Iranian oil, including Italy, Spain and Greece.