Oil rose to near $63 on Monday, setting a fresh 2007 record, on heightened geopolitical tensions between Iran and the West after Tehran vowed to continue its atomic program despite new U.N. sanctions, Reuters reports.
U.S. crude oil futures hit a three-month high of $62.79 a barrel and were up 45 cents at $62.73 a barrel by 0716 GMT, extending gains for a fourth session. London Brent crude was up 52 cents.
Iran said on Sunday it would not stop its atomic program, which it insists is only for peaceful purposes, and that it would limit cooperation with the U.N.'s nuclear watchdog in retaliation for new financial and arms sanctions. The West fears the program could be used to develop nuclear weapons.
Although the West has been locked in a protracted dispute with Iran over its nuclear ambitions, the latest developments have renewed market concerns that the world's fourth-largest oil exporter could one day cut its oil exports to strike back at the West if the relations worsened, analysts said.
"The situation in the Middle East has become much more uncertain and the risk of tensions intensifying has underpinned the rise in oil prices and will continue to support prices," said David Moore, an analyst at Commonwealth Bank of Australia.
The U.N. Security Council unanimously approved the sanctions on Saturday for Tehran's refusal to suspend its program, but major powers also offered new talks and renewed an economic and technological incentive package offer.
Iran's capture of British navy personnel last week has also heightened tensions. Iran said on Sunday it was considering charging 15 British sailors and marines with illegally entering its waters, but added it may give consular access to them after an investigation.
Concern that civil unrest may intensify in Nigeria ahead of April elections has also supported oil prices, analysts say.
Thousands of foreign oil workers have left the oil rich Niger Delta since February last year, when a new militant group staged a series of attacks that forced Royal Dutch Shell to shut a fifth of the OPEC member's oil production.
Oil has risen about 25 percent since crude oil futures hit a 20-month low of $49.90 in mid-January, a rebound led lately by falling gasoline inventories ahead of the U.S. summer driving season, when demand peaks in the world's top consumer.
(Reuters, 26/03/2007)