Oil prices steady amid supply-demand tensions

Oil prices steadied on Friday at the end of a week in which the prospect of reduced energy demand offset tight supply worries caused by turmoil in key crude producers Iran and Nigeria. New York's main contract, West Texas Intermediate for delivery in February edged up 17 cents to $99.27 a barrel. Brent North Sea for February dropped 44 cents to $110.82. "Geopolitical supply side issues continue to be the key bullish factor affecting oil prices," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore. "Besides Iran, the more immediate concern that could affect supply are the strikes in Nigeria." But a surprisingly big increase in US crude oil reserves announced this week have hit oil prices already under pressure from eurozone debt worries heightened by slowing growth in Germany. On Friday meanwhile, a nationwide strike over the removal of fuel subsidies that has locked down oil-rich Nigeria entered a fifth day after talks between the president and labour leaders failed to reach a deal. The main oil workers union has threatened to shut down crude production by the weekend if the government did not reverse the decision, a move that more than doubled fuel prices in Africa's top crude exporter. Nigeria produces more than two million barrels per day and is a key oil supplier to the United States and European Union. Meanwhile, concerns over an immediate disruption in Iranian crude exports have eased on news that the threatened EU oil embargo on Tehran might not take effect for six months, analysts said. The phased implementation of the embargo would make the break less painful for financially stressed European countries that depend on Iranian crude -- Italy, Greece and Spain. The EU is collectively the second-biggest destination for Iranian oil exports after China, taking in about 450,000 barrels per day. According to the New York Times, the United States has used a secret channel to warn Iran's leaders against closing the strategic Strait of Hormuz, saying that doing so would provoke a US response. Iran has threatened to close the narrow and strategic waterway -- a chokepoint for one fifth of the world's traded oil -- in the event of a military strike or the severe tightening of international sanctions. The United States and its allies have stepped up increasingly harsh sanctions on Iran over its nuclear enrichment programme, which they have charged is part of a secret drive to develop nuclear weapons. Iran has insisted its nuclear programme is entirely peaceful and vowed to retaliate against any strike on its facilities.