Oil Prices Climb Back Above $70 on Iran Tension

Oil prices firmed above $70 Wednesday as dealers weighed tensions over Iran's nuclear program against robust crude inventories in the United States, the world's largest energy consumer.

U.S. crude for October delivery gained 32 cents to $70.03 a barrel while London Brent crude rose 32 cents to $70.18. Both contracts closed Tuesday below $70 for the first time since June.

Click here to visit FOXBusiness.com's Energy Center.

The United Nations Security Council has told Iran, the world's fourth largest oil producer, to suspend nuclear enrichment by Thursday or face possible sanctions, but Iran has repeatedly said it will not comply.

Fears the face-off could trigger a suspension of Iranian oil supplies have supported crude's record run in recent months.

Security Council members Russia and China, however, have called for a return to talks and analysts were not expecting immediate action against Iran.

Crude oil prices briefly dipped to a 10-week low of $68.65 earlier Wednesday, after a report from the U.S. government showing a surprise build in stockpiles.

The Energy Information Administration said crude stocks rose by 2.4 million barrels, compared with analyst forecasts of a 1.5 million barrel fall, as imports surged to the second highest level on record.

Gasoline stocks also rose unexpectedly by 400,000 barrels and distillate stocks, including heating oil, increased by 1.3 million barrels, in line with expectations.

Comfortable supplies and easing political risks have pulled oil prices down by more than $9 from a record of $78.65 hit early this month.

"There will be a limit to how low prices can fall this quarter. There are still a lot of geopolitical risks," said Eoin O'Callaghan of BNP Paribas. "When there are milestones in the (Iranian) dispute, there tends to be a rally."

Nigerian oil unions decided on Wednesday to stage a "warning strike" next Wednesday lasting two or three days to protest a lack of security in the Niger Delta, a union leader said.

Warning strikes typically have no impact on oil output or shipments from the world's eighth-largest exporter, because key workers often remain at their posts or are replaced by non-union staff.

About 18 oil workers have been taken hostage in the delta this month alone. One, a Nigerian employee of Royal Dutch Shell , was killed during an attempt to free him.

The kidnappings followed a string of abductions and attacks against oil installations that forced Shell to withdraw hundreds of workers from its oil fields in the western delta in February, cutting output by 500,000 barrels per day.

Click here to visit FOXBusiness.com's Energy Center.