Brent Crude Oil Climbing on Spain Bailout

Brent crude oil has been steadily climbing Friday morning, rising nearly $1 to 113.09. This increase is largely attributed to the news of Spain's budget reform released on Thursday afternoon. While the budget reform hasn't officially requested a bailout, it shows that Spain is taking steps toward stabilizing their economy and eases investor nerves. Investor confidence in the stability of the European Union is big factor supporting oil prices. According to Bloomberg, Europe uses 16 percent of the world's oil and the continent's stability provides consistent demand. Many believe that although this renewed confidence boosted prices, it isn't likely to last through the uncertainly that lies in the wake of austerity measures. Reactions to the Spanish budget cuts have been negative among Spaniards, and with ongoing protests in Greece and Portugal, many believe investor confidence in the European economy will wane. In the fourth quarter, analysts are predicting an average crude oil price between $105 and $110.Reuters claimed that there are two legs supporting the price of oil, the Spanish budget and the recently heightened tensions between Israel and Iran. At Thursday's United Nations General Assembly, Benjamin Netanyahu spoke of his concerns that Iran's nuclear program could be on the verge of developing a nuclear weapon in just less than a year. The Israeli Prime Minister's statements support the US and EU's efforts to slow Iran's uranium enrichment program, but increased tensions between the two nations. The U.S. and EU already imposed sanctions on energy exports from Iran, resulting in an estimated $20 premium on Brent prices.