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Summary The price of oil fell 3.2 percent over concerns about the world economy.
Irans ability to rattle oil markets has been greatly diminished by growing concerns about the world economy.The price of oil fell this week even though Iran staged missile tests and renewed threats to block key oil shipments out of the Persian Gulf. Benchmark U.S. crude dropped by $2.77, or 3.2 percent, Friday to end the week at $84.45 per barrel in New York.Iran had much more influence earlier this year as it sparred with the West over its nuclear program. When Iran held military exercises in the Gulf at the beginning of the year, oil prices jumped more than 4 percent. Fears about a prolonged conflict and what that would do to world oil supplies eventually drove benchmark oil to near $110 per barrel in February.Five months later the U.S. and Europe are still concerned about Iran building a nuclear weapon and have numerous economic sanctions in place to pressure the oil-rich country to limit its nuclear program. Iran still refuses to comply.The difference, experts say, is that investors are now focusing on growing evidence that the global economy is slowing. The U.S. isnt creating enough jobs to lower its 8.2 percent unemployment rate. Europe has struggled to handle a festering banking crisis and some countries are slipping into recession. Manufacturing activity has stalled almost everywhere.Iran is still trash talking, but whats even more frightening is the bigger picture, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. The economy just hasnt looked good. Theres a sense that this malaise will march on.Traders read more troubling economic headlines on Friday. The Labor Department said U.S. employers added just 80,000 jobs in June a disappointing number that shows the economy is still sluggish three years after the recession ended. Meanwhile, borrowing rates for Spain and Italy rose to distressing levels because investors think more needs to be done to resolve Europes debt crisis.The U.S. is the world economy slows, less oil is consumed and prices tend to fall.Brent crude, which helps set the price of imported crude used to make gasoline, fell by $2.51, or 2.5 percent, to end the day at $98.19 per barrel in London.
