MercoPress. South Atlantic News Agency

Iran, Nigeria fears rebound oil prices 5 USD in one day

Oil prices rebounded by more than 5 US dollars a barrel on Thursday as another missile launch by Iran stoked worries that escalating political tensions in the Middle East could cut off supplies out of the region.

A day after Iran tested a missile capable of reaching Israel US Secretary of State Condoleezza Rice warned that the United States will defend its allies. Iran then responded with another missile launch. Israel's also reacted with the Defence minister warning his country was ready to act against Iran if it feels threatened. Ehud Barak, speaking in Tel Aviv, said Israel had "proved in the past that it won't hesitate to act when its vital security interests are at stake". But Mr Barak added that diplomatic solutions should be pursued before other options were taken up. After falling by nearly 10 US dollars a barrel on Monday and Tuesday, light, sweet crude for August delivery soared 5.60 to 141.65 US dollars a barrel on the New York Mercantile Exchange. It was crude's largest daily leap since June 6, when the July contract jumped by 10.75 a barrel. On Wednesday oil prices had settled at 136.05, ending two days of sharp declines that left prices well below last Thursday's record trading high of 145.85 a barrel. OPEC's secretary general said Thursday that the oil producing group will not be able to replace any shortfalls if Iran is attacked and takes its crude supplies off the market. The fear is that Iran could block the Strait of Hormuz, a passageway that handles about 40 percent of the world's tanker traffic. Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in that oil-rich region. On Thursday, Nigeria's main militant group vowed to resume attacks because of Britain's recent pledge to back the government in the conflict there. Attacks by the Movement for the Emancipation of the Niger Delta over the past two years have already slashed the country's normal daily oil output by a quarter. The International Energy Agency on Thursday raised its forecast slightly for global oil demand this year to 1% growth from 0.9%. But the Paris-based watchdog said that demand growth in developing countries is offsetting contracting demand in developed countries.