Crude oil rose more than $2 a barrel and gasoline climbed to a record on BP Plc's plans to shut down a North Sea pipeline, plunging Nigerian output and after a ship carrying U.S. cargo fired warning shots at Iranian boats, Bloomberg reported.
BP said it would shut the Forties Pipeline System tomorrow because of a two-day strike at a refinery in Scotland. Nigeria has lost about half of its oil production amid a strike and rebel attacks, Petroleum Minister of State H. Odein Ajumogobia said today in an interview with Bloomberg News.
``The near-term target is $120,'' said Katherine Spector, head energy strategist at JPMorgan Chase & Co. in New York. ``Even without the headlines, prices would have risen.''
Crude oil for June delivery rose $2.46, or 2.1 percent, to settle at $118.52 a barrel at 2:43 p.m. on the New York Mercantile Exchange. Futures touched $119.55 today. The June contract rose 2 percent this week. Prices are 80 percent higher than a year ago.
Prices jumped after a report that a U.S.-contracted cargo ship fired at Iranian boats in the Persian Gulf. Iran, OPEC's second-biggest oil producer, has been in conflict with the U.S. over its nuclear program and Iraq policy.
``The market has probably overreacted to news of the shots on the Iranian boats but nobody wants to take a chance with all of the other things that are going on,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago.
Brent crude for June settlement rose $2, or 1.8 percent, to settle at $116.34 a barrel on London's ICE Futures Europe exchange. The contract touched a record $117.56 today.
BP will start shutting down the Forties pipeline, which carries about 700,000 barrels a day from more than 50 North Sea oil fields, because of the strike that will start April 27 at Ineos Group Holdings Plc's Grangemouth refinery. The pipeline relies on steam and power provided by the refinery complex.
About 90 percent of Exxon Mobil Corp.'s Nigerian output of about 850,000 barrels a day is halted, said Olusola George- Olumoroti, chairman of the branch of the Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, that's taking action against the company.
Ajumogobia said that he held a meeting with union leaders today in an effort to end the strike against Exxon Mobil.
Recent attacks on Royal Dutch Shell Plc-run pipelines are cutting crude-oil flows by about 140,000 barrels a day, Ajumogobia said.
The Movement for the Emancipation of the Niger Delta's fighters claimed they detonated the oil pipeline at Kula in Rivers state at about 10:18 p.m. local time, according to an e- mailed statement from the group today. The attack occurred on a line that feeds oil to the Bonny Light export terminal, said Rainer Winzenried, a Shell spokesman in The Hague.
``These disruptions are impacting Forties and Bonny crude, which are both good for making gasoline,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.
The North Sea and Nigeria produce low-sulfur, or sweet, oils prized by refiners. U.S. refineries usually bolster fuel output in May as they prepare for the peak-demand summer driving season.
Gasoline for May delivery rose 3.51 cents, or 1.2 percent, to $3.0537 a gallon in New York, a record settlement price. Futures touched $3.0815 today, an intraday record.
U.S. pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 2.1 cents to a record $3.577 a gallon, AAA, the nation's largest motorist organization, said today on its Web site.
Oil in New York reached a record $119.90 a barrel on April 22 after the dollar touched an all-time low against the euro. The euro fell 0.5 percent to $1.56 per dollar at 3:05 p.m. in New York. Commodity contracts have become attractive to investors seeking to offset a 14 percent decline in the dollar against the euro in the past year.
``The market has been supported by a three-legged stool: The weak dollar, low refinery utilization and petro-political uncertainties,'' Beutel said. ``The upcoming strike and ongoing problems in Nigeria are the main drivers today.''
U.S. refineries operated at 85.6 percent of their capacity last week, up 4.2 percentage points from the week before, an Energy Department report on April 23 showed. The previous week refineries operated at 81.4 percent of capacity, the lowest rate since October 2005.
Oil supply from the 13-member Organization of Petroleum Exporting Countries probably fell 0.3 percent to 32.5 million barrels a day this month, according to preliminary estimates from PetroLogistics Ltd.
OPEC cut crude-oil output because of supply disruptions in Iraq and Nigeria, data from the Geneva-based tanker-tracking service showed.