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Oil rises on supply disruption concerns

Feb 01 2012 08:21 AFP

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Singapore - Oil prices edged higher in Asian trade on Monday amid concerns over a supply disruption in the Middle East and Africa.

New York's main contract, West Texas Intermediate crude for delivery in March, gained 16 cents to $99.64 a barrel in the afternoon.

Brent North Sea crude for March delivery was up 46c to $111.44.

"Oil prices continue to be affected by several factors, including the tense situation in Iran and Sudan," said Tony Nunan, energy risk manager at Mitsubishi Corp in Tokyo.

"We can expect prices to move sideways as markets are influenced by strong bullish and bearish factors," he said.

Talks between Iranian officials and a delegation from the UN atomic watchdog wrapped up late on Tuesday with no sign of any breakthrough over Tehran's nuclear programme, media reported.

The United States and the European Union have been piling severe economic sanctions on Iran in the past three months to pressure it to halt its nuclear activities, which they claim is aimed at building an atomic bomb.

On the back of an embargo on Iranian oil by the EU last week, US lawmakers on Tuesday unveiled proposals for fresh sanctions on Tehran.

Iran, which maintains its programme is for peaceful purposes, has threatened to retaliate, possibly by closing the strategic Strait of Hormuz at the entrance to the Persian Gulf.

"The dispute between Iran and the West over Tehran's nuclear programme and whether it is being used to make atomic weapons remained a focus in the market," said Phillip Futures in a commentary.

Meanwhile, traders were also closely watching the situation in South Sudan, which has nearly completed a drastic shutdown of its oil production - the fledging nation's top revenue resource - over an oil dispute with Sudan.

South Sudan has accused Khartoum of stealing $815m of its crude.

UN chief Ban Ki-moon said on Sunday that tensions between the two countries and the oil row had become a major threat to regional peace and security.

South Sudan seceded peacefully from Sudan last July after decades of war, but both countries have since repeatedly exchanged allegations that each backs proxy rebel forces against the other.

 
 
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