Oil above $70 on Nigerian tension

The violence in Nigeria has shut down a fifth of its oil production

Oil prices have risen above $70 a barrel after a fresh attack on oil installations in Nigeria belonging to France's Total.

A spokesman for Total said the oil well that had been sabotaged was disused and that there had been no injuries.

The attack followed the kidnapping by gunmen at the weekend of two Indian employees of a petrochemical company in Port Harcourt.

Brent crude oil peaked at $70.83 in London before closing at $70.49.

Regular disruption

US light, sweet crude closed up $1.33 at $66.27.

Attacks on the oil industry and kidnappings of foreign oil workers have become common in Nigeria, halting almost one third of the output of the world's eighth biggest oil exporter.

The possibility of a strike by oil workers on Thursday in protest at the proposed sale of two government-owned refineries to the private sector is also worrying investors.

"Crude futures were a little firmer, supported by further attacks and kidnappings in Nigeria," said Michael Davies, an analyst at Sucden.

Also at the weekend, plans to create a single currency for Gulf oil producers were thrown into disarray when Kuwait unexpectedly abandoned the dinar's peg to the US dollar.

Some experts are worried about a lack of supply in the market

The falling value of the dollar has put a great deal of pressure on the dinar, with speculators betting that the central bank would be forced to revalue to keep inflation under control.

Instead of the expected appreciation of the dinar, Kuwait's central bank decided to peg the currency to a basket of other currencies.

Kuwait adopted the peg to the dollar in 2003 as a first step towards possible monetary union with Saudi Arabia, Qatar, Bahrain, Oman and the UAE.

The governor of the central bank reiterated that Kuwait is committed to developing a common currency and was only acting in the national interest to contain inflation.

Supply concerns

Nigeria's peers in Opec must increase supplies to avoid oil hitting record levels, according to the Centre for Global Energy Studies.

"The world needs more oil than Opec seems willing to supply, making it difficult to avoid another surge in oil prices over the coming summer," its monthly report said.

"Far from being 'in balance' as Opec suggests, the oil market is experiencing a period of high price volatility that will persist as long as producers continue to seek prices above $60 per barrel," it added.