IPE Brent hits three-week high after Iranian crude export warning

London (Platts)--5Jun2006

IPE Brent futures in London hit a three-week high Monday in reaction to
the warning from Iran that the country's crude exports could be "put in
serious risk" if the US makes any "mistake" in dealing with the Islamic
Republic.
July Brent opened in early electronic trading at $72.20/barrel, over a
dollar up from Friday's close of $71.03/barrel. At 1029 GMT, July Brent was
changing hands at $72.58/barrel, up $1.55.
"The primary focus this morning is Iran, however the market is looking
also at the situation in Nigeria," a London-based broker said.
During a speech marking the 17th anniversary of the death of Iran's
Islamic revolutionary leader, Ayatollah Ruhollah Khomeini, Iran's supreme
leader Ayatollah Ali Khamenei said that energy supplies from the region could
be severely disrupted if tension escalates between the US and Iran over the
country's nuclear program.
"You threaten Iran. You say you want to direct energy in the region. If
you make a single mistake about Iran, the supply of energy will definitely be
put in serious risk," said Khamenei. "There is no consensus against Iran. It
is only the Americans and some of their allies, he said.
Iranian Oil Minister Kazem Vaziri Hamaneh has played down the prospect of
Iran withholding its oil exports in the event of any possible sanctions
against the country resulting from its ongoing stand-off with the US and
Europe over its nuclear program.
"There is no issue of sanctions so far so there is no need to talk about
it," he said to reporters in Caracas last Wednesday.
Supply disruptions in Nigeria were brought to the fore again after eight
foreign oil workers were kidnapped on Friday. However on Sunday, Nigerian
police said all of the workers had been released and were in the custody of
the southern Bayelsa state government.
Responsibility for the kidnappings has not been admitted, but the
Movement for the Emancipation of the Niger Delta, a militant group responsible
for previous attacks on Nigerian oil infrastructure as well as kidnapping
workers, has said it was not responsible.
"Despite the release of the workers, the manner in which they were taken
is extremely worrying and definitely bullish. These things are a reality and
the market is reacting accordingly," a broker said.
On Friday militants attacked a rig where 84 oil workers were based using
four boats, firing shots into the air before boarding the rig. The rig sent
out a distress call saying it was under attack from between 20 and 30 men.
Traders today can see the market only going in one direction due to the
fundamental geopolitical factors. "Despite the rest of Europe having a public
holiday, market players will not be missing out on this market going upwards,"
said one trader.
--Jean-Luc Amos, jean-luc_amos@platts.com

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