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Oil slides to $106 in Europe on global growth concerns, but Iran supply risks supports prices
Oil prices slid to near $106 a barrel Tuesday as concerns about global economic growth and crude demand outweighed the supply risks posed by the prolonged tensions over Iran's nuclear program.
By early afternoon in Europe, benchmark oil for April delivery was down 69 cents to $106.03 in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to settle at $106.72 per barrel in New York on Monday.
In London, Brent crude was down 68 cents at $123.12 per barrel on the ICE Futures Exchange.
On Monday, China lowered its official growth target to 7.5 percent from 8 percent, cementing concerns that the Asian exporter ' a bellwether for global economic activity ' will see business slow down.
Offsetting some of the drag on oil prices was the continuing standoff with Iran.
After a meeting Monday in Washington, President Barack Obama and Israeli Prime Minister Benjamin Netanyahu showed no sign of give on competing ways to resolve the crisis. Obama urged pressure and diplomacy to prevent Iran from getting a nuclear bomb while Netanyahu emphasized his nation's right to a pre-emptive attack.
The U.S., Europe, Israel and other nations fear that Iran may be building a nuclear weapon. Iran, the world's third-largest oil exporter, denies the charge.
"The Iranian fear premium didn't change in our view," energy consultant Ritterbusch and Associates said in a report.
Crude has risen from $96 last month amid investor concern that a military conflict aimed at destroying Iran's nuclear capabilities would disrupt global oil supplies. Analysts say Saudi Arabia and other oil producers do not have enough spare capacity to quickly make up for Iran's exports, which totaled 2.6 million barrels a day in 2011.
Analysts estimate crude would jump to $150 in the wake of an attack by Israel on Iran's nuclear operations.
"The risk of a supply disruption due to geopolitical factors is uncomfortably high and increasing," said Richard Soultanian of NUS Consulting.
In other energy trading, heating oil fell 1.08 cents to $3.2066 per gallon and gasoline futures lost 0.42 cent at $3.2538 per gallon. Natural gas added 0.1 cent at $2.356 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.