* U.N. inspectors declare Iran mission a failure
* Japan may cut Iranian imports by as much as 20 percent -
* U.S. lawmakers urge govt to cool fuel prices with oil
By Florence Tan
SINGAPORE, Feb 23 Brent crude held steady
on Thursday, near a nine-month high of about $123, as supply
worries from heightened tensions between Iran and the West
offset concerns that a slowdown in the global economy could curb
U.N. inspectors sent to visit the country's nuclear
installations declared their mission a failure, a setback likely
to increase the risk of confrontation with the West.
A larger-than-expected build in crude stockpiles in the
United States following weak economic data from China and Europe
depressed U.S. crude futures.
Brent crude for April delivery fell 5 cents to
$122.85 by 0303 GMT after it rose on Wednesday for a third day
to settle at $122.90, the highest in nine months.
U.S. crude futures for April was down 41 cents to
$105.87 after settling at a nine-month high of $106.28 a barrel
the previous day.
"Any further news of escalating tensions in Iran or other
Middle East or African countries will likely increase the risk
premium although our short-term view could be that prices could
dip today on profit-taking as prices reach overbought
territory," said Natalie Robertson, a commodity strategist at
Brent's risk premium has risen closer to $15 a barrel from
$5-$10 previously after top Iranian crude buyers China and India
planned to reduce imports from the Islamic Republic, Robertson
Japan could cut Iranian imports by as much as 20 percent or
more this year, a local newspaper reported, following reductions
planned by other buyers in Asia and Europe as Western sanctions
made trade difficult.
Front-month Brent futures have risen about 9 percent from
the start of the year as geopolitical and production issues in
Iran, the North Sea, South Sudan, Syria and Yemen tightened
Goldman Sachs said it expects Brent crude prices to rise to
$127.50 a barrel over the next 12 months in order to restrain
demand growth and keep it in line with available supplies.
"The increased supplies have been absorbed by the market and
leaves the world in the unprecedented situation in which OPEC
spare capacity is at a trough rather than at a peak just as the
world economic recovery is getting on a more solid footing,"
analysts at the bank said in a Feb. 22 note.
Asian shares and the euro fell on Thursday as the health of
the global economy was back into focus after Wednesday's data
from Europe and China showed a slowdown in service and
Skyrocketing oil costs have turned U.S. gasoline prices into
a key issue for the 2012 presidential election season.
Three Democratic lawmakers on Wednesday urged the White
House to signal it is ready to tap the nation's oil stockpiles
to combat surging fuel prices, arguing an "aggressive" strategy
could tamp down speculation.
Yet, Germany said it has no plans to release any of its
strategic oil reserves to combat rising oil prices.
"Stockpiles are only to be released if there is a
substantial decline in oil supplies, rather than in response to
higher prices," ANZ's Robertson said.
"If U.S. oil prices rise above $110 a barrel we could see a
hit on U.S. oil demand -- and this lower demand profile will
likely cap further price hikes, just as it did last year."
Oil investors will focus next on inventory reports to be
released by the U.S. Energy Information Administration on
Thursday at 1600 GMT.
U.S. crude stockpiles rose by 3.6 million barrels in the
week to Feb. 17, data from the American Petroleum Institute
showed, compared with analysts' expectations for a 500,000
(Editing by Sugita Katyal)