Oil prices rise more than $1 US as Iran Tuesday, May 09, 2006 Oil prices rise more than $1 US as Iran nuclear ambitions worries linger.
WASHINGTON (AP) - Crude-oil futures rose more than $1 US a barrel Tuesday amid persistent concerns over Iran's nuclear ambitions and after the U.S. government forecast elevated oil prices through 2007.
Oil prices have climbed in recent weeks on anxiety that Iran, the No. 2 producer in the Organization of Petroleum Exporting Countries, could cut supplies because of international pressure to modify its nuclear program.
Light, sweet crude for June delivery rose $1.03 to $70.80 a barrel on the New York Mercantile Exchange. June Brent crude futures on London's ICE Futures exchange rose 93 cents to $71.14 a barrel.
On Monday, a letter from Iran's leader to U.S. President George W. Bush proposing "new solutions" to the tension eased market worries slightly, causing the price of Nymex crude to fall as low as $68.25 before settling 42 cents lower. But Secretary of State Condoleezza Rice swiftly rejected the letter on Tuesday.
"This letter is not the place that one would find an opening to engage on the nuclear issue or anything of the sort," Rice said in an interview.
"It isn't addressing the issues that we're dealing with in a concrete way."
Other factors pushing up oil prices are unrest in Nigeria, violence in Iraq and rising resource nationalism in South America. Some 500,000 barrels per day of Nigerian production, most of it operated by Royal Dutch Shell PLC, remain off-line because of violence there, and more than 300,000 barrels per day remain shut down in the Gulf of Mexico since hurricane Katrina battered offshore platforms in August.
The U.S. Energy Department said Tuesday that with little evidence of a significant increase in global supplies "crude oil prices will remain high through 2007." The agency also forecast an average U.S. retail gasoline price of $2.71 a gallon, an increase of nine cents a gallon from its April forecast. Last summer, pump prices averaged $2.37 a gallon.
Saudi Arabia's oil minister suggested relief - though still far off - was nonetheless in sight, saying prices will stabilize by 2010.
Speaking at a financial conference in Riyadh, Ali Naimi said the world's refining capacity would nonetheless continue to be of concern over the next four years.
"Oil production during this decade will hold steady," Naimi said, adding that the kingdom - the largest oil producer in the world - was nonetheless ready to increase its crude output if necessary.
In other Nymex trading, Gasoline and heating oil futures climbed 3.4 cents to $1.9885 a gallon and $1.9580 a gallon respectively. Natural gas futures fell 5.6 cents to $6.64 per 1,000 cubic feet.