Oil rises, Mideast tension offsets Saudi pledge
Oil rose 30 cents on Monday as escalating tensions between Israel and Iran countered the impact of Saudi Arabia's promise to pump more oil and a vow by Nigerian militants to halt attacks on oil facilities in the delta, Reuters reported.
U.S. light crude for August delivery rose 36 cents to $135.72 a barrel by 0204 GMT, reversing earlier losses of more than $1. London Brent crude rose 17 cents to $135.03.
Oil prices hit a record near $140 a barrel last week and have doubled from a year ago, stoking inflation and triggering protests worldwide, but top energy policy makers meeting in Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia has boosted production twice in as many months toward 9.7 million barrels per day (bpd) next month, its highest in over 30 years, and pledged on Sunday to open the taps wider still if the market demanded it.
It also sketched out plans to boost capacity to 15 million bpd when the future demand warrants the investment, hoping to soothe growing fears that the world is running out of oil, but those measures failed to take the edge off an anxious market.
"The market took the opportunity to take profits earlier on Saudi Arabia's promise to pump more oil, but realistically that alone is not enough to calm the market," said Mark Pervan, senior commodities analyst at Australia and New Zealand (ANZ) Bank in Melbourne.
"The short-term supply situation is still very tight and tensions between Iran and Israel are back in focus."
Iran will give a "devastating" response to any attack on the country, its defence minister was quoted as saying on Sunday, the latest volley in the ongoing war of words centred around Tehran's nuclear programme.
On Friday, the New York Times quoted U.S. officials as saying Israel had carried out a large military exercise, apparently a rehearsal for a potential bombing of Iran's nuclear facilities.
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
Despite world powers' offer of economic incentives to coax Tehran into halting such activities, Iran is pressing on with uranium enrichment "non-stop", its envoy to the U.N. nuclear agency was quoted as saying on Saturday.