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BP hits 12 month high as oil price rises on Iran tensions, helping lift FTSE nearly 1%

BP in demand as crude climbs above 0 a barrel, while investor remain optimistic of Greek deal

Iran’s announcement over the weekend that it had stopped selling crude oil to British and French companies has push crude prices higher and helped sent BP shares to their highest level for almost a year.

The price of Brent has climbed 1% to 0.59 a barrel after Tehran retaliated to Europe’s latest sanctions over the country’s nuclear programme.

BP, which is one of a number of major companies which have already stopped importing crude oil from Iran, rose as high as 503p in early trading, its highest level since 7 March last year. It has since slipped back but is still 11.05p better at 500p. If it closes above 500p it would be the first time since last January.

The company’s shares have also been supported by news that Mitsui, which held a 10% stake in the disastrous Macondo well in the Gulf of Mexico, had reached a settlement with US authorities. This prompted hopes that BP might come to a deal before a court case which is due to start on 27 February. Andrew Whittock at Liberum Capital said:

Mitsui subsidiary Moex is to pay just m in civil penalties, m to 5 Gulf of Mexico states and m for land preservation projects. The settlement does not affect claims against other companies involved in the disaster but looks very modest in terms of the potential fines. Moex was a passive investor in the Macondo well and had no operational role. So this may not herald similarly modest settlements with BP and others. The non-jury trial is scheduled to commence in New Orleans on 27 February.

BP has made provision for .5bn clean water act fines; a finding of gross negligence could increase that to almost bn. BP has made very clear that it will settle before the trial if the terms are reasonable. We believe almost any settlement would be good news for the shares as it should enable BP to return to normal business operations in North America including the development of its significant Gulf of Mexico discoveries.

Rival Royal Dutch Shell has seen its A shares add 12.5p to 2305.5p. Mining companies have also been lifted by the strong crude price, with BHP Billiton 56.5p better at 2079.5p and Rio Tinto rising 82.5p to 3704.5p.

All this has helped the FTSE 100 climb 48.16 points to 5953.23, a seven month high, ahead of the key Eurogroup meeting to decided whether to approve the proposed €130bn Greek bailout. News that China had relaxed its bank reserve requirement has also helped sentiment.

But utilities are on the slide as investors move away from looking for safe havens. Severn Trent is down 15p at £15.36, the biggest faller in the leading index, while United Utilities is off 5p at 603.5p. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds