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Oil prices jump above $69 on Nigeria, Iran

Oil prices were higher in Asian trade on continued worries over security and political tensions in key producers Nigeria and Iran.

india Updated: Jan 23, 2006 08:43 IST

Oil prices were higher in Asian trade on Monday on continued worries over security and political tensions in key producers Nigeria and Iran, dealers said.

At 10.30 am, New York's main contract, light sweet crude for March delivery, was up 70 cents to $69.18 a barrel from its close of $68.48 in the United States on Friday.

Unrest in Nigeria has already disrupted production in Africa's biggest producer while simmering tensions between Iran and the West over Tehran's controversial nuclear programme were also at play, dealers said.

"In the short-term, it is all about geopolitical drama," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

"The short-term issue is Nigeria and the long-term issue is Iran," he said.

Militants have threatened to fire rockets into Nigerian oil terminals amid confusion over talks aimed at securing the release of four foreign hostages taken by separatist rebels in the Niger delta region.

Violence against oil companies operating in the Niger delta and the federal government has claimed more than 20 lives while oil production has been slashed by 2,11,000 barrels per day in Nigeria, Africa's largest oil producer.

"This morning the price crept upwards so the market continues to be driven by the short-term geopolitical (pressures) primarily in Nigeria," Shum said.

Iran, the second biggest crude producer in the Organisation of Petroleum Exporting Countries, has also asked the cartel to reduce total oil production quotas by one million barrels per day (bpd) from April to prevent a seasonal easing of prices in the second quarter of the year.

The comments came as a crisis simmers over Iran, with Tehran warning the West that UN sanctions over its controversial nuclear programme could provoke a world oil crisis.

OPEC's production ceiling stands at 28 million bpd. At its last meeting in Kuwait on December 12, the cartel decided not to renew an offer of two million bpd in emergency additional output.

First Published: Jan 23, 2006 08:43 IST