June 5 (Bloomberg) — Crude oil rose in New York to the highest in more than three weeks after Iran threatened to disrupt energy supplies from the Persian Gulf region in a confrontation over its nuclear program.
Iranian supreme leader Ayatollah Ali Khamenei said yesterday the U.S. could “seriously endanger energy flow in the region,” supplier of about a quarter of the world’s oil, by acting against Iran. Oil has risen 20 percent this year amid disruptions of supply from Nigeria and concern Iran’s exports may be cut.
“There’s a large amount of oil flowing through the Straits of Hormuz, and with the market as tight as it is, we just can’t afford to do without those flows,” said David Thurtell, a commodities strategist at Commonwealth Bank of Australia in Sydney. “They’re not just threatening to withhold their own oil, they’re threatening to disrupt energy flows through the Gulf.”
Crude oil for July delivery rose as much as $1.12, or 1.6 percent, to $73.45 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $73.25 at 7:48 a.m. Singapore time.
On June 2, oil climbed $1.99, or 2.8 percent, to $72.33 a barrel, the highest close since May 11, after an attack on a Nigerian oil rig. Oil touched $75.35 on April 21 and 24, the highest since trading began in 1983. Prices gained 1.3 percent last week.
Iran, which pumps 3.85 million barrels a day of crude, is strategically located to shut off exports of about 17 million barrels a day from the Gulf region through the Straits of Hormuz.
Khameini, in the address carried by the official Islamic Republic News Agency, said Iran is in a stronger position than the U.S. because President George W. Bush is the most unpopular leader in the world.
Bush “faces protests and public wrath wherever he steps on earth,” IRNA cited Khamenei as saying.
U.S. Secretary of State Condoleezza Rice dismissed the threats, saying the Persian Gulf country needs the oil sales.
“We shouldn’t put too much emphasis on a threat of this kind,” Rice said yesterday on the “Fox News Sunday” program. “After all, Iran is also very dependent on oil revenue.”
The U.S., China, Russia and three European nations are offering Iran, holder of the world’s second-largest oil and natural gas reserves, a package of incentives to re-engage in negotiations on its nuclear program if the government in Tehran abandons efforts to enrich uranium. The U.S. contends Iran is heading toward development of nuclear weapons, while Iran says it is seeking to develop nuclear plants to produce electricity.
“Iran seems to be sticking to the line that they are going to have nuclear enrichment no matter what,” Thurtell said. “If Iran is forced to rely on anyone for their nuclear fuel processing it compromises their long-term energy security, and I don’t think they’re going to be prepared to do that.”
In Nigeria, kidnappers yesterday released eight foreign oil workers they took hostage two days earlier in the Niger River delta. The incident was the fourth kidnapping of foreign oil workers this year in Nigeria, Africa’s top oil producer.