Iran crisis, China growth, weak dollar affecting global oil prices

By Brien Southward

Oil prices have exceeded $100 per barrel as the ongoing diplomatic conflict between the United States and Iran threatens to impact global oil trade. Other contributing factors to the rise include China’s better-than-expected economic growth and a weakened U.S. dollar.

Tensions between Iran and the West have been a significant force in recent rises in global oil prices. Amid warnings from the United States over its nuclear program, Iran has threatened repeatedly to close the vital Strait of Hormuz, which is a vital sea outlet for oil exports from the Persian Gulf. In the wake of the new economic sanctions, other oil-producing nations, such as Saudi Arabia, have started to step in to meet the demand.

Iran, which faces a new round of economic sanctions from Western nations for its continued refusal to end its nuclear program, claims the nuclear research is peaceful and only intended to help meet the nation’s energy needs. The United States alleges they are attempting to develop nuclear weapons. Another Iranian nuclear scientist was recently killed by a magnetic bomb, the fifth in two years, which Iran claims is a CIA-related assassination.

China has said its economy grew by 8.9 percent in the fourth quarter, which is less than its growth the quarter before but still strong enough to help cause a rise in gas prices. China’s growth had slowed in 2011 as a result of the government imposing measures to control inflation and regulate the economy, but a gain of 8.9 percent nonetheless exceeded expectations. China, which is the world’s second-largest economy, is also the world’s second-largest oil consumer.

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