Crude oil rose above $66 a barrel in New York, closing at a six-month high, on concern that Iran's capture of 15 British sailors and marines increases the likelihood of a disruption of shipments from the Persian Gulf.
Iran, the world's fourth-biggest oil producer, won't release the only woman being held, a government official indicated today. Iran's foreign minister had said earlier she might be freed. Prearranged orders to buy futures at specific prices, known as stop orders, were triggered as prices rose.
``The Iranian tensions remain the main driver of this market,'' said Tom Bentz, an oil broker with BNP Paribas Inc. in New York. ``I wish there was something new to point to but there isn't. Once we got above $65 stops were triggered and the market went crazy.''
Crude oil for May delivery rose $1.95, or 3 percent, to settle at $66.03 a barrel at 2:49 p.m. on the New York Mercantile Exchange. It was the highest closing price since Sept. 8. Futures have climbed for eight straight trading days, the first time that's happened since June.
Brent crude oil for May settlement rose $2.10, or 3.2 percent, to $67.88 a barrel on the London-based ICE Futures exchange. It was the highest close since Sept. 5.
The rise in prices accelerated on reports that Adebayo Adefarati, the presidential candidate for Nigeria's Alliance for Democracy party, died today. Nigeria, Africa's biggest oil producer, will elect state governors and legislators on April 14 and a new president and federal lawmakers a week later.
Royal Dutch Shell Plc's Nigerian venture has cut its output by as much as 664,000 barrels a day because of attacks by militants and sabotage. The fifth-biggest supplier to the U.S., Nigeria produces low-sulfur, or sweet, crude oil, prized by refiners for the proportion of high-value gasoline it yields.
Strait of Hormuz
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.
``The premium is probably too high,'' said Kevin Book, senior analyst with Friedman Billings Ramsey & Co. in Arlington, Virginia. ``The last thing that Iran wants is to inflame the U.S. or its allies enough to initiate action that shuts shipping in the Gulf. Iran's economy depends on the flow of oil out of the Gulf and gasoline coming in.''
Iran, holder of the world's second-largest oil and natural gas reserves, imports more than 40 percent of its gasoline.
The British ``resorted to creating tumult and clamor and putting pressure on Iran but this will bring them no result,'' said Ali Larijani, head of the Islamic republic's Supreme National Security Council. ``If the British go along this path the case for freeing the British female sailor will run into problems.''
Release Demanded
The Foreign Office in London responded by reiterating the U.K. government's demand that all the detainees be released. ``We are saying that we want all our personnel to be released,'' the department said in a statement. ``We expect them all to be released'' and to have consular access as a prelude to them being freed.
``Iran has two aims, one is to establish itself as a credible regional force,'' Book said. ``They want to present themselves as strong enough to resist growing international pressure. The cynical might say they are raising tensions so they can benefit from increased oil prices.''
The capture of the Britons occurred as the U.S. and its European allies accused Iran of trying to develop nuclear weapons. The United Nations Security Council on March 24 toughened nuclear sanctions by unanimously backing a resolution freezing the assets of a state-owned Iranian bank and imposing penalties on some military commanders.
A Large Portfolio
The seizure of the U.K. forces and the nuclear dispute may not be linked, Mark Kimmitt, the U.S. Deputy Assistant Secretary of Defense for Middle East Affairs, said in London. ``It is part of a large portfolio of unwelcome and unhelpful behavior on the part of the Iranian government that I think the entire world has got some concerns about.''
U.S. gasoline supplies fell 7.5 percent to 210.2 million barrels in the past seven weeks, an Energy Department report released yesterday showed. U.S. crude oil, heating oil and diesel inventories also declined last week, the report showed.
Gasoline for April delivery in New York rose 7.83 cents, or 3.8 percent, to $2.1355 a gallon, the highest closing price since Aug. 11.
