Oil Market Only Mildly Affected by Gulf Tension

Oil traders ignored Iran’s outrage Tuesday over the U.S. destruction of an Iranian jetliner, saying the aftermath of the Persian Gulf incident probably would not affect petroleum shipping or inflate prices.

On the New York Mercantile Exchange, a sensitive barometer of world prices, the contract for August delivery of West Texas Intermediate crude oil rose 15 cents a barrel to $15.09 in light trading. The exchange was closed Monday for the Independence Day holiday.

“Demand is small and supply is great, and as we see it right now, no one’s going to listen to what the Iranians say,” said Thomas McKiernan, head of McKiernan & Co., an energy-futures trading concern in New York.

Although prices opened about 20 cents higher, the lack of aggressive buying signaled traders that Iran’s vow to avenge the American missile attack on an Iranian commercial flight Sunday was mostly rhetoric that would have marginal impact on the busy oil-shipping lanes in the Persian Gulf.

“No one can stop the flow of traffic. Everyone has their navies over there,” said McKiernan. “If the market couldn’t open at least 50 cents higher on news like this, it wasn’t going to go there.”

Others said they were more concerned about the waning influence of the Organization of Petroleum Exporting Countries, the 13-nation cartel that once was able to dictate prices through its ability to constrict supplies.

The $15-a-barrel range where prices are now is $3 less than OPEC’s intended target and is the lowest level this year.

Some analysts speculated that if the jetliner had been shot down during a business day, prices would have surged, at least initially. But because many traders had time to assess the risks while most world oil markets were closed, the reaction was muted.

Others said previous Iranian vows of retribution against the United States or Iran’s wartime enemy Iraq had never resulted in a significant slowdown of Persian Gulf shipping, so the latest warnings were discounted or dismissed.

“The oil market has gotten very ho-hum about the Iran-Iraq hostilities,” said Stephen Smith, an oil analyst at Bear Stearns Cos. in New York. “An occasional oil platform is taken out, but oil keeps coming. So the market has seen oil keep flowing no matter what the rhetoric.”

Jayne Ball, an energy-futures trader at Dean Witter Reynolds Inc. in New York, said: “The expectations are that the Iranians aren’t going to take any action that threaten oil supplies. If they were, the market would have been up a dollar here. The market already has figured out that’s not going to happen.”