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Oil prices rise as tensions mount over Iran
AFP
NEW YORK
Petroleumworld.com 03 28 07World oil prices ended higher Tuesday as the market continued to reflect unease over Iran's nuclear intentions and the country's detention of 15 British sailors seized in the Gulf.
US military exercises in the Gulf involving two US aircraft carrier strike groups also unsettled the market, traders said.
New York's main oil futures contract, light sweet crude for delivery in May, closed up a slight two cents at 62.93 dollars, rebounding from earlier lows.
In London meanwhile, the price of Brent North Sea crude for May delivery settled up 19 cents at 64.60 dollars a barrel. Brent had earlier struck 64.64 dollars, its highest level since December 4.
"Although the odds still remain low for a confrontation to occur, political risk premium is certainly being priced into futures again," said Fimat energy analyst Mike Fitzpatrick.
"Even if the political boil lowers to a simmer, support is also emanating from a succession of refinery problems," Fitzpatrick said.
Industry experts say Iran could easily disrupt its oil exports should tensions surrounding the Islamic Republic's nuclear program escalate.
Iran, the world's fourth-biggest producer of oil and a key member of the Organization of the Petroleum Exporting Countries, rejected on Tuesday UN Security Council conditions that it suspend uranium enrichment in return for talks on its controversial nuclear program.
"If suspending uranium enrichment is a prior condition for negotiations, it is impossible to respond positively to this," Deputy Foreign Minister Mehdi Mostafavi said in remarks reported by the ISNA student news agency.
On Saturday the Security Council had unanimously approved further sanctions against Iran for refusing to halt enriching uranium.
The international community has demanded that Iran suspend enrichment, which it fears could be used to make nuclear weapons. Tehran rejects the demand, insisting its nuclear program is for peaceful energy purposes.
The imposition of sanctions followed news on Friday that Iran had seized 15 British naval personnel in the Gulf, a move which triggered unease in the oil market.
British Prime Minister Tony Blair warned Iran that efforts to secure the release of 15 personnel would enter a "different phase" if diplomatic efforts failed.
Britain has sought to keep up pressure on Iran which has rejected growing international calls for their release. Iran claims the British servicemembers had entered its territorial waters illegally.
The BBC, citing sources, said they were being held in Tehran, where they were being interrogated by the members of the Revolutionary Guards.
A Pentagon spokesman downplayed the US military exercises in the Gulf.
He also denied that the two day exercise involving the aircraft carriers USS Dwight D. Eisenhower and USS John S. Stennis was a response to the seizure by Iran of the 15 British sailor and marines.
"We are not interested in confrontation in the Gulf," said the spokesman, Bryan Whitman.
Aside from keeping an eye on developments in Iran, dealers looked ahead to Wednesday's crucial weekly update on energy inventories in the United States.
The US Department of Energy's stocks report was forecast to show further falls to gasoline or petrol reserves in the week ending March 23.
AFP 27 1957 GMT 03 07
Copyright© 2007 AFP. All Rights Reserved.
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