NEW YORK – Crude oil prices rose above $73 a barrel Monday on supply concerns arising from Iran's defiance of a U.N. Security Council deadline to stop enriching uranium.
Also lifting energy prices Monday were refinery outages in Italy and California, and violence in Nigeria, the fifth-largest source of U.S. oil imports.
Light, sweet crude for June delivery rose $1.82 to settle at $73.70 a barrel in midday trading on the New York Mercantile Exchange. Prices briefly dipped below $71 last week after surging above $75 the week before that.
"Once prices retreated toward $70, we saw the speculators come back in," said Fimat USA broker Mike Fitzpatrick.
Iran's top nuclear negotiator defiantly declared Sunday that his country was "allergic to the suspension" of uranium enrichment, while its president insisted Iran was within its rights under the Nuclear Nonproliferation Treaty to enrich uranium to fuel reactors for civilian electricity generation.
Friday marked the U.N. Security Council deadline for Iran to stop uranium enrichment, and International Atomic Energy Agency chief Mohamed El-Baradei has issued a report certifying Iran was in violation.
His report opened the way for the council to take punitive measures against Iran, but immediate action was not seen as likely because veto-holding members Russia and China are opposed to international sanctions.
Iran, OPEC's second-largest oil producer, has said it does not intend to halt oil exports as a political tactic, but some traders fear it's a possibility if the dispute escalates, which would most likely cause oil prices to rise.
Gasoline futures added 5.74 cents to settle at $2.1466 a gallon, while heating oil prices advanced 4.59 cents to settle at $2.0588 a gallon.
Also supporting prices are shrinking U.S. gasoline supplies, strong global demand and supply disruptions by separatist rebels in Nigeria.
In Nigeria, the militant group Movement for the Emancipation of the Niger Delta on Saturday set off a car bomb, damaging a base for tankers lifting fuel from a refinery in the city of Warri, a southern oil port, but causing no deaths or injuries.
The group has carried out a series of attacks on oil infrastructure in the southern Niger Delta region where most of Nigeria's oil is pumped, resulting in a 20 percent cut in production from the average 2.5 million barrels per day.
The militants say they are fighting for a bigger cut of oil revenue controlled by the government. President Olusegun Obasanjo's administration says the militants are little more than thieves, involved in lucrative black-market dealings in stolen oil.
Adding to market jitters Monday were refinery disruptions — some small fires at an ERG plant in eastern Sicily, which refines about 160,000 barrels of oil a day, and a power failure at a ConocoPhillips plant in Rodeo, Calif., which refines about 105,000 barrels a day. The ConocoPhillips (COP) plant restored power Monday, but it was unclear how many days the ERG plant would be shut down.
Some market participants worry that oil producers are pumping at capacity while global demand continues to grow, but Saudi Oil Minister Ali Naimi said analysts who suggest the world's oil production is at or near a peak are "very short-sighted," and fail to recognize the industry's repeated ability throughout history to improve oil recovery rates by employing new drilling techniques.
"It is true that the age of easy oil is over," said Exxon Mobil's chief executive, Rex Tillerson. "What many have failed to recognize is that it has been over for decades." In other words, it is new technologies, such as three-dimensional seismic data collection and horizontal drilling, that have enabled the oil and gas industry to keep up with demand.
An increase by 1 percent in recovery rates from Saudi oil fields, Naimi said, would add 3.5 billion barrels of crude oil to the world market.
Abdallah Jum'ah, president and CEO of Saudi Aramco, said Saudi Arabia is producing between 9 million and 9.5 million barrels of oil per day.
"But mind you that we have a policy in Saudi Arabia that says we will keep between 1.5 million to 2 million of extra capacity over and above" that amount, he added, referring to the supply cushion in case of an unexpected loss in the world's supply.
Still, he said he hopes there will be peace in Iraq soon. "We need right now every barrel that can come into the market," Jum'ah said.
Naimi, Tillerson and Jum'ah spoke during a half-day U.S.-Saudi energy conference sponsored by the Center for Strategic and International Studies.
Crude-oil prices are about 40 percent higher than a year ago. But accounting for inflation, prices are still about 20 percent below the records reached in 1981, when supplies became tight after a revolution in Iran and a war between Iraq and Iran.