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Bloomberg: Oil Trades Little Changed Near Six-Month High on Iran Tensions

By Christian Schmollinger and Angela Macdonald-Smith

April 2 (Bloomberg) — Oil was little changed near a six- month high on concern the stand-off between the U.K. and Iran over the capture of British naval personnel may disrupt crude supplies from the Middle East’s second-largest exporter.

The U.K. condemned film footage on Iranian state television yesterday of the British captives standing in front of a map of the Gulf region, describing how and where they were detained. Oil prices have risen 5.5 percent since the sailors and marines were taken by Iran on March 23.

“The prices reflect a degree of stalemate between Iran and Britain,” said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. “Some are betting that there won’t be any real disruptions to supplies while other are speculating that the situation may get worse before it gets better.”

Crude oil for May delivery was at $65.68 a barrel, down 19 cents, in after-hours electronic trading on the New York Mercantile Exchange at 1:24 p.m. Singapore time.

On March 30, the contract fell 16 cents, or 0.2 percent, to $65.87 after closing the previous day at $66.03, the highest since Sept. 8. Prices rose 5.8 percent last week and 7.9 percent in the first quarter.

“The major point of attention for everybody in the market at the moment seems to be what the next steps will be in the Middle East,” said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney.

In London, Brent crude oil for May settlement was at $68.08 a barrel, down 2 cents, in electronic trading on the ICE Futures exchange at 1:21 p.m. Singapore time.

OPEC Producer

Iran has the second-biggest proved oil reserves and is the second-largest producer in the Organization of Petroleum Exporting Countries. Almost a quarter of the world’s oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.

U.K. Defense Secretary Des Browne yesterday called for “diplomatic means” to resolve the impasse. The government is in “direct bilateral communications” with Iran, Browne said in a statement issued by the Ministry of Defense in London. Hours after that statement, Iranian TV showed the new pictures of the detained Britons.

Iran says the British servicemen’s two vessels had entered half a kilometer inside its territorial waters. The U.K. rejects the claim, saying the boats were 1.7 nautical miles (3.1 kilometers) inside Iraqi waters at the time of the seizure.

Earlier yesterday, members of Iran’s Basij militia protested in front of the British embassy in Tehran, throwing rocks and firecrackers to protest over the alleged illegal entry of U.K. forces into Iranian waters, Agence France-Presse reported.

French Strike

French port workers voted to end a 17-day old strike at the Fos-Lavera oil terminal near Marseille that has 63 vessels stranded outside Europe’s second-largest import hub.

The port workers union and the company reached an agreement late yesterday, said Pascal Galeote, a representative of the Confédération Générale du Travail. The CGT started the strike over the future of the workforce at a liquefied natural gas terminal that is under construction at Fos by Gaz de France.

Four refineries, including two owned by Total SA that depend on crude from Marseille’s Fos-Lavera oil terminals, have curbed output and may have to shut next week. The closings may affect European gasoline supplies and exports of the motor fuel to the U.S. ahead of the peak summer demand season.

“That’s a bit of bearish news for the U.S. oil products market,” said Purvin & Gertz’s Shum.

Gasoline futures for May delivery were at $2.0525 a gallon, down 0.55 cent, in after-hours trading on Nymex.

Nigeria Kidnapping

Nigerian gunmen kidnapped a British oil worker on March 31 from a drilling rig in the Niger River delta, ThisDay reported, without citing anyone. The kidnappers used two speed boats to reach the offshore Bulford Dolphin rig, operated by Peak Petroleum Industries Nigeria Ltd., the Lagos-based newspaper reported yesterday.

More than 200 people, about half of them expatriates, have been abducted in Nigeria’s oil-producing region in the past year by militants and kidnappers. Militant attacks have forced Royal Dutch Shell Group’s venture in Nigeria to reduce output by 477,000 barrels a day, or about half its average daily production.

“Nigeria is a place to watch as there are elections coming up this month so some escalation in the unrest is expected,” said Shum.

To contact the reporters on this story: Christian Schmollinger in Singapore at [email protected] ; Angela Macdonald-Smith in Sydney at [email protected]

Last Updated: April 2, 2007 01:33 EDT and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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