MercoPress. South Atlantic News Agency

Oil report: Iran tensions push oil price

Oil held below $63 on Tuesday after hitting a 2007 high the previous day on the widening political dispute between Iran and the West and concerns over supply in the United States due to refinery glitches.

U.S. light, sweet crude for May delivery was trading down 11 cents at $62.80 a barrel by 0408 GMT, while Brent crude shed 8 cents to $64.33. On Monday, U.S. crude and London's Brent struck their highest levels this year on news that Iran's Naval Revolutionary Guards units seized 15 British sailors and marines in the Gulf on Friday, a day before the United Nations imposed new sanctions on the OPEC producer over its nuclear programme. The stand-off between Western nations and the world's fourth-largest oil producer has compounded market supply fears, although there has been no disruption to Iran's daily exports of around 2.2 million barrels. "The market reacted immediately to the political tension," said Hiroyuki Kitakata, analyst at Barclays Capital. "The key that drove oil prices to $62-$63 level may be the tension." But he added that the overall supply and demand situation was much tighter than the market viewed it to be as gasoline demand for the coming summer driving season will be higher than expected, giving further support to prices. Gasoline futures led gains on Monday, striking a seven-month high amid refinery snags, and analysts forecasting stocks of the motor fuel in the U.S., due for release on Wednesday, to show a 2.3 million-barrel drop last week. NYMEX April RBOB gasoline settled up 6.94 cents, or 3.5 percent, at $2.06777 a gallon, after rising to $2.0700, the highest intraday price since mid-August. It was trading at $2.0690 on Tuesday. "OPEC has already tightened supply, and with strong demand, I predict the prices will go up above $70 before the summer," Kitakata said. BP Plc reduced rates to the 175,000 barrels per day (bpd) gasoline-making unit at its refinery in Indiana, following a small fire on Thursday, trade sources said. Total Petrochemicals USA shut a sulphur-recovery unit at its Texas plant on Monday, a notice filed with the Texas pollution regulation agency showed. The high oil prices have prompted the head of the International Energy Agency to urge OPEC to raise output. The Organization of the Petroleum Exporting Countries recently agreed to keep existing oil output curbs, after cutting supply by a total of 1.7 million bpd in two stages starting November 1 and February 1 this year.