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oil gains on middle east violence Oil gains to $75 on Middle East violence
Secretary of State Rice heads to Beirut to seek 'sustainable' cease fire in Lebanon.
July 24 2006: 4:46 PM EDT


NEW YORK (Reuters) -- Oil rose above $75 a barrel Monday after the United States said an immediate cease-fire in the violence between Israel and Hezbollah is "unenforceable."

News of refinery outages in the western hemisphere in the midst of the U.S. summer driving season also helped push crude higher, dealers said.


U.S. crude oil for September delivery rose 72 cents to settle at $75.15 a barrel on the New York Mercantile Exchange.

Secretary of State Condoleezza Rice flew unannounced to Beirut on Monday to seek a "sustainable" cease fire in Lebanon, where Hezbollah guerrillas were battling an Israeli tank incursion in the south.

But White House spokesman Tony Snow questioned the viability of an immediate cease-fire.

"I think the notion that you have a cease-fire at this point is unenforceable and does not really get us to the point we need to be at," Snow said.

Oil hit a record $78.40 in New York earlier in July on fears the fighting between Israel and Hezbollah guerrillas could spread to other parts of the Middle East, which produces about a third of the world's oil. Prices are still up about 21 percent this year.

Some oil analysts now view the chance of the conflict widening as less likely, making it less of a prop for prices.

"The markets are now viewing the Israeli/Hezbollah conflict as localized, and are not assigning it the same sense of urgency," Man Financial said in a report.

Refinery, Nigeria woes
Oil also gained after traders said a crude distillation unit at Venezuela's Amuay refinery will be shut for five to seven months following a fire.

The plant is part of the giant 940,000 barrel per day (bpd) Amuay-Cardon complex, the world's biggest refining complex and a top supplier of U.S. gasoline imports.

Additional supply concerns came on news Exxon Mobil (Charts) plans to shut two units at its 349,000 bpd Beaumont, Texas for three to four weeks of maintenance in August, traders said.

ConocoPhillips (Charts) is seeking to set up temporary cooling towers at its Wood river refinery following damage caused by a severe storm last week.

A pipeline leak at the Shell-operated Nigerian Bonny oilfields has cut 180,000 barrels per day of crude output, company officials said on Monday, deepening supply losses from the OPEC nation.

The National Hurricane Center on Monday said a tropical disturbance could form in the Gulf of Mexico over the next day or two. U.S. crude hit then-record prices last summer after hurricanes damaged oil industry installations along the U.S. Gulf Coast.

Oil dipped early on news Iraq had completed repairs to one of two sabotaged oil pipelines that export crude from its northern fields to Turkey and aims to restart the flow this week. The pipelines have been mostly shut due to sabotage since the U.S.-led invasion of Iraq in 2003.


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