Crude futures rose Friday, on oil supply worries after the International Atomic Energy Agency said that Iran defied the UN Security Council by enriching uranium.
Iran, OPEC's second-largest oil producer, has said it seeks the technology only to generate power, but some other countries, including the US, believe it aims to create weapons.
Iran has also said it did not intend to halt oil exports as a political tactic, but some traders fear it's a possibility if the dispute escalates. That bullishness has been aggravated by tight US gasoline supplies, strong global demand and supply disruptions by separatist rebels in Nigeria, the fifth-largest source of US oil imports.
Light, sweet crude rose US$0.91 to settle at US$71.88 a barrel on Friday on the New York Mercantile Exchange. On London's ICE futures exchange, Brent crude for June rose US$1.11 to settle at US$72.02 a barrel.
Gasoline futures rose US$0.0202 to settle at US$2.0921 a gallon (US$0.55267 per liter), while heating oil rose US$0.0272 to settle at US$2.0129 a gallon. Natural gas slipped US$0.25 to US$6.555 per 1,000 cubic feet (US$0.2315 per cubic meter).
Prices began rising earlier on Friday as the UN deadline approached and Iran's President Mahmoud Ahmadinejad offered no hints of conciliation, vowing that "no one" could make his country give up nuclear technology and that the country "won't give a damn" about any UN resolutions concerning its nuclear program.
The UN Security Council is expected to meet next week to start a process that could result in punitive measures against Iran. The possibility of that inciting the Islamic republic to cut their oil exports is what traders are bracing for.
"As an oil market participant, it's hard to know," said Fimat USA analyst John Kilduff, adding that the Iran situation has added about US$10 a barrel to crude futures. "Given all the rhetoric ... everyone's positioning themselves accordingly."
Kilduff added that an agreement with Iran, as well as an agreement between the Nigerian government and separatists, could push crude prices down back towards the US$60-a-barrel mark.
But if the tension keeps mounting, he said, they will likely rise above US$80 a barrel, he said.
Traders speculated that Chinese oil demand might slow after the nation's central bank said it would raise benchmark one-year lending rates to 5.85 percent from 5.58 percent.
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