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The New York Times: Oil Pushes Over $68 as Iran Talks Overshadow OPEC

Published: January 30, 2006
Filed at 1:19 a.m. ET
SINGAPORE (Reuters) – Oil prices climbed half a dollar to above $68 a barrel on Monday, shrugging off a likely rollover in OPEC production to focus on key talks over Iran's nuclear program and more militant attacks in Nigeria.
U.S. light crude climbed 46 cents to $68.22 a barrel after soaring $1.50 a barrel on Friday. Prices are up more than $7 this year and touched $69.20 a barrel a week ago, the highest since Hurricane Katrina hit the U.S. Gulf Coast last summer.
London Brent crude climbed 55 cents to $66.79.
OPEC's meeting in Vienna on Tuesday is being overshadowed this week by talks on Iran, with the United States and European Union powers gathering later on Monday to try to convince Russia and China to back tough diplomatic action to prevent Tehran from continuing with its nuclear activity.
On Thursday, the U.N.'s International Atomic Energy Agency will hold an emergency session at which the board could decide to send Iran to the U.N. Security Council, a move traders fear could prompt Tehran to consider using its oil as a political weapon.
“The market has the same buy factors — Iran and Nigeria — and now increasing tension ahead of the IAEA meeting could drive the market higher,'' said Naohiro Niimura, vice president of the derivatives unit at Mizuho Corporate Bank in Tokyo.
Concerns over supplies from the world's fourth-largest exporter, as well as lost output from Nigeria, have added fuel to a market ignited by a new flood of fund money into the commodities complex, which has performed strongly for two years.
Last week's robust U.S. inventory levels, a pledge from Saudi Arabia to fill supply gaps and the promise of an emergency release from Western government stockpiles if Iran or Nigeria halted exports failed to reverse the rally.
Although OPEC producers remain concerned over the seasonal dip in second quarter demand, most agree the Organization of the Petroleum Exporting Countries has little choice but to keep output steady at near a 25-year high when it meets on Tuesday.
“I think we should leave things as they are,'' Algerian Energy and Mining Minister Chakib Khelil told reporters in Vienna on Sunday. “We will look again in March.''
Saudi Oil Minister Ali al-Naimi went a step further, saying he saw no reason to cut production at any time this year.
OPEC is scheduled to meet again on March 8, also in Vienna.
In Nigeria, where major producer Royal Dutch Shell has already shut in over 200,000 barrels per day (bpd), around 20 armed men stormed and robbed a South Korean oil services firm on Saturday, the latest attack on a foreign oil company.
In a positive step, the Nigerian government said on Monday that four foreign oil workers who had been abducted from a Shell platform nearly three weeks ago had been released and were well.

Disruptions to Russia's natural gas supplies to Europe and some of its former Soviet neighbors have also unsettled traders and lifted oil demand. Exports to Georgia began flowing again on Sunday, a week after pipeline explosions cut supplies, while supplies to Italy improved over the weekend.
Norway, the world's third-biggest oil exporter, joined the list of supply concerns after a small oil workers' union said on Friday it would consider a strike to halt production at the Oseberg field if talks on a wage deal failed.
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