Oil surges above $71 to 9-month high on Iran

Reuters: Oil climbed above $71 to a nine-month high on Thursday after a report by the United Nations’ nuclear agency opened the way to tougher sanctions against the world’s fourth biggest crude exporter. LONDON (Reuters) – Oil climbed above $71 to a nine-month high on Thursday after a report by the United Nations’ nuclear agency opened the way to tougher sanctions against the world’s fourth biggest crude exporter.

London Brent crude , a more accurate indicator than U.S. oil, gained 64 cents to $71.24 a barrel by 0811 GMT, after hitting a fresh nine-month high of $71.29.

U.S. crude traded up 20 cents at $65.97.

Prices steamed higher after U.S. warships put on a show of force off Iran’s coast on Wednesday, coinciding with a report by U.N. monitors that Tehran had expanded its nuclear programme.

“Iran has come back to the forefront and it’s definitely having an impact,” said an oil broker in Tokyo.

U.S. officials said the navy buildup was the largest daytime assembly of ships since the Iraq war began in 2003, adding Iran had not been notified of plans to sail the ships through the Strait of Hormuz, a major artery for global oil shipments.

Iran is making substantial advances in uranium enrichment in defiance of world demands, U.N. monitors said on Wednesday, opening the way to harsher sanctions against the world’s fourth-largest oil exporter over fears it is seeking atom bombs.

The heightened Iran tension added to concerns about summer fuel supplies in the world’s top consumer the United States, where gasoline inventories have been rising but remain below average levels ahead of summer demand.

U.S. government data on Wednesday showed gasoline stockpiles increased by 1.5 million barrels last week, exceeding a 1.4 million barrels forecast.

Despite record prices, year-on-year demand surged 1.2 percent over the past four weeks.

“Two big things are keeping prices up, the Nigerian and gasoline situation,” said Tony Nunan of Mitsubishi Corp. “Inventories are too low for this time of year.”

Supplies of gasoline-rich crude from Nigeria, the world’s eighth-largest oil exporter, have been cut since February 2006 due to militant attacks on its oil industry.

Chevron Corp. said on Wednesday it had restarted normal production at its Pennington oilfields in Nigeria, after shutting in 15,000 barrels per day (bpd) on May 1, leaving about 695,000 bpd or 23 percent of the country’s output shut.

(reporting by Neil Chatterjee and Damon Evans)