oil to move higher

Monday February 6, 11:27 AM
Oil prices jump on Iran supply fears


LONDON (AFP) - Oil prices moved sharply higher on supply fears after the International Atomic Energy Agency voted to refer Iran to the UN Security Council, dealers said.

Iran said Monday that large-scale uranium enrichment work, the focus of fears it is seeking nuclear weapons, would begin in "due course" in response the IAEA's decision over the weekend.

New York's main contract, light sweet crude for delivery in March, gained 73 cents to 66.10 dollars per barrel in electronic deals.

In London, the price of Brent North Sea crude for March delivery won 93 cents to 64.32 dollars per barrel.

The spike in prices was mostly due to the "uncertainty regarding the situation in Iran and the very clear decision of the IAEA to refer the country to the UN Security Council", said Dariusz Kowalczyk, senior investment strategist with CFC Seymour in Hong Kong.

The oil-rich nation is the second-biggest producer within the Organization of Petroleum Exporting Countries, exporting 2.7 million barrels of crude per day.

On Saturday, the 35-nation IAEA voted to refer Teheran to the UN Security Council over its disputed nuclear program.

Iran, which says it only wants to enrich uranium to make reactor fuel, triggered the latest crisis by resuming uranium conversion activities last August and enrichment research on January 10.

Enrichment can be used to make nuclear reactor fuel or atom bomb material.

Kowalczyk said the market is buying oil on concerns that referral to the UN Security Council could lead to sanctions or an oil embargo that would disrupt supply.

"The reason they are so afraid of supply disruptions is there is very little spare capacity," he said.