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News: Page (1) of 1 - 01/27/12

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Oil price waver on Persian Gulf supply concerns

Oil prices waver as Iran considers ban on shipments to European Union; gasoline futures jump

By The Associated Press

Oil prices moved in a narrow range Friday as Iran prepared to consider a ban on crude sales to European Union countries.

Iranian leaders are scheduled to debate the ban Sunday in response to EU plans to embargo Iran's oil by summer because of that country's nuclear program. Investors worry that any ban could cause supply disruptions.

Benchmark oil fell 26 cents $99.44 per barrel in afternoon trading after climbing as high as $100.63 per barrel earlier in the session. Brent crude rose 34 cents to $111.13 per barrel.

EU countries account for about 18 percent of Iran's oil exports. Analysts believe any shortfall in Europe could be made up by other countries. If it stops selling oil to Europe, Iran should find takers in Asia. China is its biggest oil customer.

The U.S. doesn't buy Iranian oil, but has approved sanctions on Iran's banks to make it harder for Iran to sell crude anywhere.

Iran also has threatened to block the strategic Strait of Hormuz in the Persian Gulf. About one-fifth of the world's supply of oil is shipped through the strategic waterway. The U.S. and other nations have said they will not tolerate an Iranian blockade. U.S., British and French warships regularly patrol the Gulf.

In other trading, gasoline futures jumped 2.5 percent on concerns about future supplies after next month's closure of the big Hovensa refinery in the U.S. Virgin Islands. It produced about 350,000 barrels per day, but the high price of crude has made it unprofitable. The closure comes as many refineries slow down for regular spring maintenance.

Oil trader Stephen Schork said the big concern is U.S. East Coast refineries, which produce much of the nation's fuel. "The gasoline supply situation in the East is fine but we're looking down the road," he said.

Gasoline futures rose 7 cents to $2.92 per gallon. Futures prices have been rising steadily since December, along with the price of oil.

Elsewhere heating oil rose 2 cents to $3.07 per gallon and natural gas rose 5 cents to $2.65 per 1,000 cubic feet.

At the pump, AAA says the national average for a gallon of regular gasoline rose a penny on Friday, to $3.39. That's about 15 cents more than a month ago and nearly 29 cents more than a year ago.

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AP Energy Writer Jonathan Fahey contributed to this report.