Iran move prompts oil price rise
January 31, 2006
Crude oil prices continued to rise on Tuesday amid growing tension between the international community and Iran over its nuclear programme.
The permanent members of the United Nations Security Council agreed that the nuclear watchdog, the IAEA, must report to the UN on Iran's position.
There are fears that prices could spike further if Iran limits its oil output in response to possible sanctions.
Opec is pumping oil at near-record levels to try and stem price rises.
Nervous time
Members of the oil producers cartel, which is meeting in Vienna on Tuesday, have said they would leave current output levels untouched.
Ahead of the key meeting, the price of a barrel of light, sweet crude rose 3 cents to $68.38 in Asian trading.
In London, Brent crude rose eight cents to $68.38.
Crude costs have been buoyed in recent weeks by concerns over the escalating row with Iran and the threat of unrest in Nigeria.
Iran is the world's fourth largest oil exporter so the clash over its nuclear programme has made traders increasingly nervous.
"Geopolitically there are lots of hot spots, like Iran," said John Brady, at ABN Amro.
Iran resumed nuclear fuel research earlier this month but claims that it is doing so for civil rather than military purposes.
The dispute comes at a time when demand for oil is outstripping supply, a trend that is set to continue until new investment in extraction and refining filters through this year.
"Despite the efforts to avert a crisis [with Iran], the market seems unconvinced that it's unlikely that we can have an outcome that will not affect the price of oil," said Phil Flynn, an analyst with Alaron Trading.
Opec reassurance
Opec, whose members produce a third of the world's oil, sought to calm nerves on Monday by stressing it would maintain total output at more than 28 million barrels a day.
Its daily output has touched 30 million barrels a day in recent months, but that has done little to ease prices.
Opec president and Nigerian Oil Minister Edmund Daukoru said on Monday that prices were "a little uncomfortable".
However, experts believe demand for crude will ease after the peak winter period and cold weather that has put extra pressure on supplies.
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