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Last Updated: Thursday, 24 May 2007, 13:47 GMT 14:47 UK
Oil price at $71 nine-month high
Graph showing oil price movements in 2007
Oil prices have risen above $71 as the prospect of further sanctions against Iran increased and Nigerian output was threatened by a strike.

Workers at Nigeria's state-owned oil firm began an indefinite strike and said they could disrupt oil supplies, already damaged by militant violence.

Pressure also mounted further on Iran after UN monitors reported that it had accelerated its nuclear programme.

The price of Brent crude rose 68 cents to a nine-month high of $71.42.

It later eased slightly to $71.28 while US light, sweet crude rose 33 cents to $65.44.

Iranian tensions

Prices have been on an upward curve in recent months owing to a range of factors including instability in Nigeria, whose oil-rich Niger Delta region has been plagued by regular violence and kidnappings of foreign workers.

Oil refinery in Iran
Pressure in building on Iran over its nuclear policy

Daily output is already 695,000 barrels below normal - and supplies could be hit further, as striking workers threaten to target oil production facilities if their concerns over pay and privatization plans are not addressed.

At the same time, signs that the dispute over Iran's nuclear ambitions could be entering a new, more troubling phase have also concerned investors.

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

The news coincided with US naval manoeuvres off the coast of Iran.

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

Despite rising by 1.5 million barrels last week, supplies are abnormally low as a result of a number of refinery shutdowns.

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

"Two big things are keeping prices up," said Tony Nunan, an analyst at Mitsubishi Corp. "The Nigerian and the gasoline situation."

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