Oil falls towards $69 on as Nigeria, Iran unrest dent sentiments

Oil&Gas Materials 22 June 2009 08:14 (UTC +04:00)

Oil steadied at below $70 a barrel on Monday, extending the previous session's over 2 percent decline, as cautiousness sets in amid geopolitical risks in Iran and North Korea, Reuters reported.

Although North Korea's nuclear defiance and political unrest in Iran, the world's fifth-largest oil exporter, are unlikely to have an impact on crude supplies, analysts say growing tensions were denting investors' sentiments.

U.S. crude for July delivery fell 50 cents to $69.05 by 0103 GMT. The contract fell $1.82 to settle at $69.55 a barrel on Friday.

London Brent crude fell 29 cents to $68.91.

"Sentiment is being spooked by escalating protests and violence in Iran and tensions are also simmering over North Korea's nuclear defiance," said Michelle Kwek, an analyst at Informa Global Markets.

In the wake of the country's Presidential election, Iranian opposition leader Mirhossein Mousavi urged supporters to continue protests over the re-election of hardline President Mahmoud Ahmadinejad, in a direct challenge to the Islamic Republic's leadership.

Amid reports that North Korea, which conducted a nuclear test on may 25, may be looking to launch a long-range missile toward Hawaii, U.S. President Barack Obama said on Sunday the country's military is prepared for any contingencies.

Still, analysts said ongoing attacks of oil facilities in Nigeria by militant groups may help lift prices in the short term.

Nigeria's main militant group said on Sunday it had attacked three oil installations belonging to Royal Dutch Shell (RDSa.L) in the Niger Delta, widening a month-old offensive against Africa's biggest energy industry.

Rebels in Nigeria, the world's seventh-largest oil exporter, have been carrying out attacks on the oil industry for years in what they claim is a struggle aimed at spreading the region's energy wealth to the poor local communities.

Oil fell 2.5 percent on Friday, dragged lower by a sell-off in the gasoline market as dealers bet there would ample fuel supply in the United States to meet demand from summer vacationers.

Crude oil speculators on the New York Mercantile Exchange slashed their net long positions nearly in half in the week to June 16, data from the Commodity Futures Trading Commission showed on Friday.