NEW YORK: Oil rose yesterday as Nigerian supply disruptions and escalating tensions between Israel and Iran outweighed Saudi Arabia’s pledge to raise output and keep markets well-supplied.
US crude rose $1.56 to $136.92 a barrel by 1809 GMT in choppy activity, while London Brent crude traded up $1.38 to $136.24 a barrel.
Nigeria’s senior oil workers union began a limited strike at Chevron yesterday. While the stoppage has not disrupted production yet, it added to concerns about supplies from the OPEC nation after militant attacks shut 340,000 barrels of daily production last week.
“The No. 1 issue in the market today is the strike in Nigeria. But traders are also uneasy about the agreement among European Union states to impose new banking sanctions against Iran, which comes on the heels of increasing tensions between Israel and Tehran,” said Phil Flynn, an analyst at Alaron Trading in Chicago.
Saudi Arabia said it will boost production to 9.7 million barrels per day (bpd) in July, its highest in more than 30 years, and pledged on Sunday to pump even more if the market demanded it.
OPEC President Chakib Khelil said yesterday oil producers could not pump more without demand for extra supply, and at the moment that demand did not exist.
The White House yesterday welcomed Saudi Arabia’s pledge to increase oil output but sought to dampen any expectations that the move would do much to ease record US gasoline prices. “We certainly think that it’s ... welcome that Saudi Arabia will further increase their production, but we also believe that the fundamental issue of supply and demand continues to rule on this predicament that we’re in, in our country,” White House spokeswoman Dana Perino told reporters.
Euro falls
The euro fell against the dollar yesterday after weak economic data for the euro zone and ahead of a US central bank meeting at which interest rates are expected to remain on hold. The European single currency fell to 1.5492 dollars in late London trade from 1.5611 dollars in New York late on Thursday. Against the Japanese currency, the dollar increased to 107.88 yen from 107.25.
Traders reacted to Germany’s key business climate index, which dropped to an 18-month low point in June due to high oil prices.
In Britain, the pound was weaker after more bad news about the property market.
