Oil rallies as US, Israel intensify war against Iran

Oil prices rallied to an eight-week high as consumers criticized Washington and Tel Aviv for intensifying war rhetoric on major oil producer Iran.ICE December Brent, the global benchmark, rose $2.15 a barrel by midday in New York to $114.13 a barrel before the International Atomic Energy Agency released its biased report on Iran's nuclear program, and the prices predictably soared higher after IAEA Chief Yukiya Amano presented his US-dictated report. Iran is a member of the OPEC oil cartel and traders are starting to worry that the IAEA report could lead to an attack by Israel on Tehran's nuclear facilities. An attack could disrupt oil production and lead to closure of the Strait of Hormuz, the gateway for oil exports from key OPEC producers in the Middle East region, including Saudi Arabia. "The smart oil traders I know aren't talking about anything else," said Seth Kleinman, oil and gas strategist at Citigroup in London. The rally in Brent prices pushed the contract above the crucial 200-day moving average, triggering automatic buy-orders by computer-driven buying programs. Analysts said the market was closely watching to see if the benchmark - which has been in a well established downward trend since April - could remain above the important technical level and break up the current trading range. "People are watching to see where [the Brent contract] settles," said James Zhang, oil strategist at Standard Bank. Meanwhile, ICE Futures Europe, the exchange, announced it was launching its new ICE Brent NX futures and options contracts next month. The launch by the London-based ICE Futures Europe aims to prevent a disconnect between the derivatives and physical markets ahead of a change in the way oil prices are calculated.