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Last Updated: Wednesday, 23 May 2007, 21:28 GMT 22:28 UK
Global worries push oil above $70
US driver looking at fuel prices
Supply problems have pushed up US fuel prices recently
Oil prices breached the $70 a barrel mark as concerns mounted over tensions between the US and Iran once more.

US naval exercises off the coast of Iran which coincided with a report claiming Iran is continuing its nuclear development plans, prompted concern.

In London, Brent crude closed $1.08 higher at $70.60, in the US light sweet crude rose 26 cents to close at $65.77.

Prices were also driven higher by US data showing fuel stockpiles were below average, ahead of the holiday season.

Meanwhile, at an Opec meeting in London, Algerian Energy Minister Chakib Khelil said the oil producing cartel would not increase production to ease prices as the recent spike was not the result of crimped supplies.

'Show of force'

A series of factors, including tensions in Iran and oil-rich Nigeria, pushed prices to a nine-month high above $70 earlier this month.

A United Nations report published on Wednesday concluded that Iran was still defying the ban on uranium enrichment.

The news coincided with nine US warships sailing through the Strait of Hormuz, off the coast of Iran, in a move interpreted by analysts as a show of strength.

Meanwhile, French president Nicolas Sarkozy warned Tehran it faced tougher sanctions if it did not co-operate with the international community over its proposed nuclear program.

Iran was not notified in advance of the US naval manoeuvres, involving 17,000 personnel.

"We are still of the opinion that this is a more symbolic show of force than anything else," said Olivier Jakob, from oil analysts Petromatrix.

Surging demand

Meanwhile, low fuel supplies in the US have also been driving prices higher.

Stockpiles are currently lower than average - despite rising by 1.5 million barrels last week - as a result of a number of refinery shutdowns.

The key demand season for petrol in the US kicks off in May when millions of Americans take to the roads for their holidays - particularly ahead of the upcoming long Memorial weekend public holiday.

Tight supplies have pushed fuel (gasoline) prices to a record $3.22 a gallon recently.

Surging prices have prompted the House of Representatives to introduce measures that for the first time would create a law banning energy price "gouging".

The move would allow prosecution of oil firms, traders or retailers that take "unfair advantage" or charge "unconscionably excessive" prices for fuels.

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