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Oil up ahead of Iran atomic meet, eyes on Nigeria

Written by: Staff
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SINGAPORE, Mar 6 (Reuters) Oil prices edged up to their highest level in a month on Monday as traders braced for Iran's reaction to the U.N. atomic watchdog's meeting later in the day and absorbed renewed militant threats in Nigeria.

Frontmonth U.S. crude extended last week's four-day rising streak to add 23 cents to .90 a barrel in opening electronic trade, its highest level since Feb. 7.

Prices have gained a barrel or 7 percent in the past two weeks as mounting geopolitical concerns overshadow hefty crude and fuel inventories in the United States.

Iran vowed on Sunday to resume industrial-scale atomic fuel production if the U.N.'s International Atomic Energy Agency (IAEA) moves its case to the Security Council, as is set to happen after the agency meets in Vienna on Monday.

That will open the way to possible Security Council action over concern Tehran wants to build atomic bombs. Oil traders fear the world's fourth-largest oil exporter could retaliate by cutting off supplies.

One official sent mixed signals on Sunday.

''We are not interested in using oil as a weapon ... but if the conditions change, it could affect our decision,'' Iran's chief nuclear negotiator, Ali Larijani, told a news conference.

He did not specify what he meant by a change in conditions.

U.S. Ambassador to the United Nations John Bolton said Iran faced ''tangible and painful consequences'' if it continued its nuclear activities.

Markets were also on edge after a renewed threat against the oil industry in eighth-largest exporter Nigeria, where militants have forced operators to shut in 455,000 barrels per day (bpd) of production for more than two weeks.

''God willing, we hope to reduce Nigeria's export by a further one million barrels for the month of March,'' the militants said in an email at the weekend.

With prices high and supply-security concerns paramount, OPEC appears set to carry on pumping at near its limits after it meets on Wednesday to discuss second-quarter policy.

''It is unlikely that OPEC will take action at this meeting, but it will keep its options open to take action if needed (later),'' an OPEC delegate told Reuters, adding that oil markets were ''well balanced'' and stockbuilds ''reasonable''.

REUTERS VJ RAI0600

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