Oil down after spike on Saudi raid, eyes Iran deal

SINGAPORE, Feb 27 (Reuters) Oil prices fell half a dollar on Monday as dealers cautiously weighed a ''basic'' nuclear deal agreed by Iran and Russia and took light profits from last week's surge on a failed Al Qaeda attack on a huge Saudi oil facility.

U.S. oil futures for April delivery were down 49 cents to .42 a barrel in early trade. Prices soared SINGAPORE, Feb 27 (Reuters) Oil prices fell half a dollar on Monday as dealers cautiously weighed a ''basic'' nuclear deal agreed by Iran and Russia and took light profits from last week's surge on a failed Al Qaeda attack on a huge Saudi oil facility.

U.S. oil futures for April delivery were down 49 cents to $62.42 a barrel in early trade. Prices soared $2.37 a barrel on Friday after news of the failed raid on an oil facility that handles most Gulf supplies from the world's biggest exporter.

''There is a kind of profit-taking this morning after the Saudi attack and the Iran compromise,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.

''But the most important thing is the Saudi issue and Al Qaeda saying they could attack at any time. We have to watch their activities. Geopolitics will support $60 this week,'' Emori added.

Al Qaeda at the weekend vowed more attacks after its raid on Friday against the Abqaiq crude processing plant -- the world's biggest -- was foiled by security services before it could cause any serious damage to facilities. [ID:nL25387755].

''We shall not cease our attacks until our territories are liberated,'' they said in a Web site statement.

Most of Saudi's 7.5 million barrels a day of crude oil is exported from the Gulf via the huge producing, pumping and processing facility at Abqaiq.

It was the first direct strike on a Saudi energy target since al Qaeda launched attacks aimed at toppling the U.S.-allied monarchy in 2003, serving oil traders a fresh reminder of the geo-political risks beyond those in Iran, Iraq and Nigeria.

''BASIC AGREEMENT'' IN IRAN Iran said on Sunday it had reached a ''basic agreement'' with Russia on jointly enriching uranium. Moscow had proposed for Iran's uranium to be enriched in Russia to defuse suspicions that it might use some of the fuel for nuclear weapons.[ID:nOLI645649] But there was no immediate sign that Tehran would suspend home-grown enrichment, the crux of a dispute that oil traders fear could disrupt exports from OPEC's second-largest producer.

Dealers will now be looking for more clues when the the board of the United Nations' watchdog, the International Atomic Energy Agency (IAEA), meets on March 6 to discuss its latest report.

Tehran could next be referred to the U.N. Security Council for sanctions, which traders fear could spur Tehran to withhold oil supplies in retribution, although oil ministry officials have repeatedly insisted this will not happen.

''I don't think Iran will stop oil exports because of the money, but we have to wait and see for the IAEA meeting,'' Emori said.

Adding to the supply woes, in Nigeria, the world's eighth largest oil exporter, there was no sign of Royal Dutch Shell restarting the 455,000 barrels a day (bpd) of production that was shut in just over a week ago due to militant violence.

With prices hovering above $60 a barrel, OPEC may be content to agree to keep pumping at near full throttle when it meets on March 8, despite worries about the downturn in second quarter demand and robust inventories in the United States.

''Our position is that we should not change production,'' Algeria's Energy and Mines Minister Chakib Khelil said on Saturday.

Reuters CH GC1005 .37 a barrel on Friday after news of the failed raid on an oil facility that handles most Gulf supplies from the world's biggest exporter.

''There is a kind of profit-taking this morning after the Saudi attack and the Iran compromise,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.

''But the most important thing is the Saudi issue and Al Qaeda saying they could attack at any time. We have to watch their activities. Geopolitics will support this week,'' Emori added.

Al Qaeda at the weekend vowed more attacks after its raid on Friday against the Abqaiq crude processing plant -- the world's biggest -- was foiled by security services before it could cause any serious damage to facilities. [ID:nL25387755].

''We shall not cease our attacks until our territories are liberated,'' they said in a Web site statement.

Most of Saudi's 7.5 million barrels a day of crude oil is exported from the Gulf via the huge producing, pumping and processing facility at Abqaiq.

It was the first direct strike on a Saudi energy target since al Qaeda launched attacks aimed at toppling the U.S.-allied monarchy in 2003, serving oil traders a fresh reminder of the geo-political risks beyond those in Iran, Iraq and Nigeria.

''BASIC AGREEMENT'' IN IRAN Iran said on Sunday it had reached a ''basic agreement'' with Russia on jointly enriching uranium. Moscow had proposed for Iran's uranium to be enriched in Russia to defuse suspicions that it might use some of the fuel for nuclear weapons.[ID:nOLI645649] But there was no immediate sign that Tehran would suspend home-grown enrichment, the crux of a dispute that oil traders fear could disrupt exports from OPEC's second-largest producer.

Dealers will now be looking for more clues when the the board of the United Nations' watchdog, the International Atomic Energy Agency (IAEA), meets on March 6 to discuss its latest report.

Tehran could next be referred to the U.N. Security Council for sanctions, which traders fear could spur Tehran to withhold oil supplies in retribution, although oil ministry officials have repeatedly insisted this will not happen.

''I don't think Iran will stop oil exports because of the money, but we have to wait and see for the IAEA meeting,'' Emori said.

Adding to the supply woes, in Nigeria, the world's eighth largest oil exporter, there was no sign of Royal Dutch Shell restarting the 455,000 barrels a day (bpd) of production that was shut in just over a week ago due to militant violence.

With prices hovering above a barrel, OPEC may be content to agree to keep pumping at near full throttle when it meets on March 8, despite worries about the downturn in second quarter demand and robust inventories in the United States.

''Our position is that we should not change production,'' Algeria's Energy and Mines Minister Chakib Khelil said on Saturday.

Reuters CH GC1005