• search

Oil marches towards $75 as Iran tension heats up

Written by: Staff

SINGAPORE, May 3 (Reuters) Oil rose to almost a barrel on Wednesday, near record highs as mounting tension over Iran's nuclear plan compounded worries of global supply disruptions amid forecast of falling fuel stocks in the United States.

U.S. light, sweet crude traded up 34 cents at .95 a barrel by 0331 GMT, extending a rally for a fourth successive day after a jump of 91 cents on Tuesday. Prices were within striking distance of their all-time peak of .35 a barrel on April 24.

IPE Brent crude matched Tuesday's record of .97 a barrel, but was later trading at .80 a barrel, up 16 cents.

''The Iranian situation is increasing the geopolitical risk premium that the market builds into the price of oil,'' said Dariusz Kowalczyk of CFC Securities in Hong Kong.

Prices have soared nearly over the past four days amid a fresh surge of fund investment that has also lifted gold to a 25-year high on a weak dollar, and platinum to a record.

Dealers will focus later in the day on U.S. weekly fuel inventory data expected to show a ninth-successive decline, but it was Iran that dominated the market.

Iran, which issued a threat on Tuesday to attack Israel in response to any ''evil'' act by the U.S., said it had succeeded in purifying uranium to 4.8 percent, at the top end of the 3 to 5 percent range used in nuclear power plants.

The world's fourth-ranked crude oil exporter, which has used a test cascade of 164 centrifuges to enrich uranium so far and is building two similar cascades, says it will start installing 3,000 centrifuges later this year. This could yield enough material for one bomb within a year.

The U.S. and Israel have vowed to stem Iranian nuclear enrichment and Washington has not ruled out military action if diplomacy fails. Iran's deputy oil minister said on Tuesday that he was worried about the possibility of an attack.

CONFRONTATION LOOMS ''We have announced that wherever America does something evil, the first place that we target will be Israel,'' a senior Revolutionary Guards commander, Rear Admiral Mohammad-Ebrahim Dehqani, was quoted by ISNA news agency as saying on Tuesday.

U.N. ambassadors from the U.S., Britain and France will set a Security Council resolution this week to make Iran comply with demands to halt enrichment.

''The events seem to be moving into a confrontation and the market is afraid what it will do to supply,'' Kowalczyk said.

Adding to the market strain, a quarter of Nigeria's exports remain halted due to militant violence while Bolivia's move to nationalise its energy sector has alarmed foreign investors and could inspire similar moves by other South American countries.

Fears that the U.S. could be short of gasoline supplies added to the worries, with the peak driving demand season due to start in three and a half weeks.

''While surging high imports likely allowed total U.S.

gasoline stockpiles to start rebuilding in the week ended April 28, it may take time for depleted East Coast stocks to reach desired levels ahead of the peak summer driving months,'' said Antoine Halff from Fimat in New York.

Gasoline stocks probably fell by 700,000 barrels last week, alongside a fall of 100,000 barrels in crude inventories and a 100,000-barrel drawdown in distillates, a Reuters poll found.

The market was also concerned whether regular supplier Northwest Europe could sufficiently cover gasoline exports to the U.S., after the giant refinery complex run by Italian energy group ERG at Priolo in Sicily was fully shut on Tuesday.

The shutdown, triggered by a fire on Sunday, removed a total of 400,000 barrels of daily crude distillation capacity due to planned maintenance at the larger of the two Priolo refineries.


For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more