Fears over Iran and Nigeria keep oil traders nervous

OIL prices edged back toward record highs yesterday as the threat of war on Iran and the disruption of supplies from Nigeria kept international traders nervous.

Nerves were frayed further when US energy giant ExxonMobil announced it had pulled out non-essential staff from the Nigeria's largest oil export terminal amid growing fears dissidents were liable to attack the site.

Meanwhile, Iran has refused to rule out the use of oil as a weapon in the worsening stand-off over the Islamic republic's disputed nuclear quest.

In New York yesterday the new main contract, light sweet crude for delivery in June, rose 54 cents to $73.87 (€59.53) per barrel in electronic deals.

Earlier that same contract went as high as $75.35pb (€60.72), matching the record achieved last Friday.

Brent North Sea crude for June delivery rose 75c to $73.75pb (€59.43).

It hit an historic peak of $74.79 (€60.27) last Friday.

Meanwhile BP's profits were hit in the first quarter following the fall out from last year's hurricane season in the US. The British oil giant reported a 4% fall in profits thanks to the impact of storm damage to rigs and the shutdown of its biggest refinery in the US.

BP's profits totalled $5.27 billion (€4.25bn) between January and March compared with $5.49bn (€4.43bn) a year ago.

Hurricanes knocked out its Thunder Horse rig in the Gulf of Mexico and production has yet to be restarted, contributing to group output falling below last year at a time when crude oil prices averaged $61.79 (€49.80) a barrel 5% higher than the final quarter of 2005.

Paul J Harris, head of energy and emissions, Bank of Ireland Global Markets, said prices will stay under pressure, making it unlikely prices would fall back to last August's high of $70.85 (€57.10) as some have been anticipating.

Iran and Nigerian supply factors continue to weigh on the minds of traders, he said.

Because of attacks on Nigerian pipelines the global market is down 500,000 barrels of oil per day from that source and the fear is that supplies will continue to be disrupted by dissidents, as the move by Exxon yesterday highlighted.