Oil below $102 as Iran oil embargo

Oil prices hovered above $102 a barrel Wednesday in Asia as the European Union's efforts to block imports of Iranian oil appear to be stalling. Benchmark crude for February delivery dropped 3 cents to $102.21 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract rose 93 cents to settle at $102.24 in New York. Oil prices rallied Tuesday after China said oil imports grew 6 percent from a year earlier in December. Strong demand for oil in China, the world's second-biggest oil consumer behind the US, is a boost to global crude prices. Tension between Iran and Western powers over Iran's nuclear program has also helped keep crude above $100. However, prices edged down Wednesday after the EU's plan to ban purchases of Iranian oil in hopes of choking off funding for the country's nuclear program were bogged down by issues such as exemptions for existing supply contracts. Officials have said exemptions for long periods of time would significantly weaken any proposed embargo. Some EU members, notably Greece, are also heavily reliant on Iranian oil. "There is a premium attached to oil prices due to the Iranian tension but efforts by the EU to impose an embargo on Iranian oil appeared to be stalling," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. The US has recently enacted new sanctions targeting Iran's central bank and its ability to sell petroleum abroad. Iran has threatened to respond to sanctions by shutting the Strait of Hormuz, a transit route for a fifth of the world's oil. Shum said concerns over the health of European economies amid a debt crisis also dragged down oil prices. Oil also fell after the American Petroleum Institute's data showed a rise in US crude inventories last week, he said. The Energy Department is expected to release its weekly inventory report. In other Nymex trading, heating oil rose 1.6 cents to $3.12 per gallon and gasoline futures added 1.3 cents at $2.79 per gallon. Natural gas futures were down 4.7 cents to $2.89 per 1,000 cubic feet.