By Upstream staff
Photo by AFP
Oil prices held steady at over $72 this morning after a two-day rally, as Iran vowed to press ahead with its nuclear programme, raising the prospect of sanctions.
US crude was 1 cent up at $72.46 a barrel by 0227 GMT, after surging $2.39 in the past two trading days. London Brent crude rose 10 cents to $73.48 a barrel.
Iran is due to give its reply today to a package on incentives by world powers that aims to end a nuclear standoff with the West, but Supreme Leader Ayatollah Ali Khamenei vowed yesterday that Iran would continue its path on nuclear energy.
The United Nations Security Council has demanded that Iran halt its nuclear work by 31 August.
“The main risk for the oil market is that we’re closer to a time when Iran’s oil might not be on the market,” Tobin Gorey of the Commonwealth Bank of Australia told Reuters.
Traders fear that Tehran may use its oil exports of more than 2 million barrels per day as a weapon to defend itself in the row. Officials have said sanctions will harm the West more than Iran by sending oil prices even higher.
Yesterday US President George W. Bush urged the international community to act at the UN to curb Iran’s nuclear ambitions and said there has to be a “consequence” for Tehran’s actions.
The Iranian concern has driven US crude back up from a dip below $70 yesterday, which came after a ceasefire between Israel and Lebanon helped push prices down from a record $78.40 in July.
Oil prices remain 19% up this year on the fear of disruption to Iran’s exports and reduced Nigerian supplies.
Shell, Nigeria’s largest foreign oil producer, is losing 495,000 barrels of oil equivalent per day of output it operates in Nigeria, mostly due to militant attacks on installations.
A partial outage in BP’s Prudhoe Bay oilfield was also expected to lead to a drop in US crude inventories last week, industry analysts said in a Reuters survey
Traders are keeping an eye on the fourth tropical depression of the 2006 Atlantic hurricane season, which formed on Monday in the far-eastern Atlantic and was expected to become Tropical Storm Debby, after hurricanes damaged US production last year.
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