Oil prices rose above US$126 in Asian trade yesterday amid fresh worries about Iran’s disputed nuclear program and a new storm brewing in the Gulf of Mexico, dealers said.
In afternoon trade, New York’s main contract, light sweet crude for delivery next month, jumped US$0.96 to US$126.06 a barrel from its close of US$125.10 on Friday. Brent North Sea crude for delivery next month was up US$1 at US$125.18.
“It’s Iran again ... the Iranian issue remains fluid and it looks like more sanctions will be imposed by the world powers and they will likely raise tensions over Iran,” said Victor Shum, a Singapore-based analyst at Purvin and Gertz.
Iran is the fourth largest crude oil producer in the world and traders fear supply disruptions from the Islamic republic if tensions between Tehran and the West heighten over its controversial nuclear program.
Tensions over Iran’s nuclear program pushed oil prices to above US$147 last month.
Meanwhile, a new storm brewing in the Gulf of Mexico, where key US energy facilities are located, is adding to supply jitters, dealers said.
Tropical Storm Edouard is expected to be very near the southwestern coast of Louisiana and the upper Texas coast by late today.
“Some reports are saying much of the US offshore oil production facilities are in the likely path of the storm but it is a little too early to say what the direction of the storm is going to be,” Shum said.
Nigeria, a key crude producer, is also fueling supply concerns as local police and French officials confirmed on Sunday two French nationals were kidnapped in the oil-rich Niger Delta region.
Violence in the southern region has reduced Nigeria’s total oil production by a quarter since January 2006.
Nigeria was Africa’s largest oil producer until it was overtaken in April by Angola, OPEC data showed.
In related news, Global Energy Development PLC, a UK-based explorer in Latin America, found oil during a test at the Tilodiran 3 well in the Colombian Rio Verde contract.
The well was drilled to a depth of about 4,000m and oil from the so-called Ubaque formation flowed at 322 barrels a day, the London-based company said in a statement distributed by the Regulatory News Service yesterday.
The company said it would test two other formations in the well over the next week.
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