Oil prices rise in thin market as Iran defies UN sanctions

Dubai (Platts)--26Dec2006

Oil prices rose in thin post-holiday trading early Tuesday, edging past
$63/barrel for front month Brent after Iran declared it would step up its
nuclear program in response to UN Security Council sanctions.

The Iranian response immediately raised fears over a threat to supply
from OPEC's second biggest producer, a trader for a major said on Tuesday.

IPE Brent blend futures for February delivery were up 69 cents at
$63.11/barrel at 1313, while US light sweet crude oil futures on the London
exchange were up 41 cents at $62.82/barrel in electronic trade.

Support for markets also came from the UAE, which notified its crude
lifters that it would trim allocations for February by 3-5%, and from a
pipeline explosion in Nigeria, which killed at least 200 people.

The trader said prices were moving in very thin trade, with the London
market closed and Singapore closed after half a day's business.

"I would say Iran is the leading factor in the market today," said the
trader for a European oil company. "Psychologically, now that there are
sanctions, people will look at supply of crude from Iran so obviously there
has been some reaction," he said.

Iran, OPEC's second biggest producer with current output estimated by
Platts at 3.85 million b/d, on Tuesday said that UN Security Council
resolutions would not have an impact on the oil industry, nor would there be
any change to the country's oil export plans, the semi-official news agency
Fars reported.

"The country will use any weapon to defend itself if necessary, but other
countries should not be worried about a cut of Iran's oil exports to world
markets, because deals are going on and even new contracts are being signed,"
Oil Minister Kazem Vaziri Hamaneh was quoted as saying.

"This resolution will not affect the developments of Iran's oil
industry," he said.

After weeks of diplomatic wrangling, the UN Security Council on Saturday
adopted a resolution that imposes restrictions on Iran's nuclear industry and
ballistic missile program.

"Iran has been under different sanctions for years and many companies
have not been able to cooperate with our country," Hamaneh said.

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