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Last Updated: Tuesday, 31 January 2006, 12:17 GMT
Iran moves to ease oil concerns
Iranian oil minister Kazem Vaziri Hamaneh
Kazem Vaziri Hamaneh says oil exports remain separate
Iran has moved to reassure the West that it does not plan to reduce its oil exports if the UN introduces sanctions against its nuclear ambitions.

Its oil minister Kazem Vaziri Hamaneh said the issues were entirely separate.

Speaking ahead of a meeting of the oil producers' cartel Opec, he said "from our point of view there's no link between the two".

Global oil prices have risen in recent weeks due to growing international concern about Iran's nuclear plans.

Mixed oil prices

The permanent members of the United Nations (UN) Security Council have agreed that the nuclear watchdog, the International Atomic Energy Agency (IAEA), must report back on Iran's position.

The United States and Europe are concerned that Iran's efforts to build nuclear power stations could in fact be hiding attempts to also develop nuclear weapons.

Their concerns could lead to a call for the UN Security Council to introduce sanctions.

Mr Hamaneh's comments appeared to cool the price of the UK's Brent crude, but US light crude continued its upward trajectory.

By lunchtime trading in Europe, Brent crude had fallen nine cents to $66.50, while US light crude was up 10 cents to $68.45 a barrel.

Strong demand

Opec is currently pumping oil at near-record levels in an effort to stem price rises.

The threat of unrest in Nigeria has also pushed prices higher, but it is the diplomatic clash over Iran's nuclear efforts that has caused most disquiet among oil traders.

Iran resumed nuclear fuel research earlier this month, but claims that it is doing so for civil rather than military purposes.

The Iran dispute comes at a time when demand for oil is outstripping supply, a trend that is set to continue until new investment in extraction and refining filters through this year.

"Despite the efforts to avert a crisis [with Iran], the market seems unconvinced that it's unlikely that we can have an outcome that will not affect the price of oil," said Phil Flynn, an analyst with Alaron Trading.

Weather pressure

Opec, whose members produce a third of the world's oil, on Monday sought to calm nerves by stressing it would maintain total output at more than 28 million barrels a day.

Its daily output has touched 30 million barrels a day in recent months, but that has done little to ease prices.

Opec president and Nigerian Oil Minister Edmund Daukoru said on Monday that prices were "a little uncomfortable".

However, experts believe demand for crude will ease after the peak winter period and cold weather that has put extra pressure on supplies.


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