Oil rises above $91 amid Iran nuclear concerns

[May 29, 2012]  SINGAPORE (AP) -- Oil prices rose slightly to above $91 a barrel Tuesday in Asia amid concerns that tensions over Iran's nuclear program could escalate as sanctions tighten this summer.

Benchmark oil for July delivery was up 36 cents to $91.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 20 cents at $90.86 on Friday, the last day it settled in New York. Markets were closed in the U.S. on Monday for the Memorial Day holiday.

Brent crude for July delivery was down 3 cents at $107.08 per barrel in London.

Crude has dropped from $106 four weeks ago amid signs of slowing global growth and optimism a military conflict over Iran's nuclear capabilities could be avoided.

Last week, negotiators from Iran and six world powers met for a second round of meetings and agreed to talk again next month.

However, sanctions by the U.S. and Europe aimed at limiting Iran's oil exports are scheduled to tighten in July, and reports that Iran is continuing to enrich uranium -- a key component to building a nuclear weapon -- have traders nervous.

"The market undoubtedly found support based on Iran's ability to string the West along," energy trader and consultant The Schork Group said in a report.

The U.S. and Israel have said they will not accept Iran developing nuclear weapons. Iran says it is developing nuclear power for peaceful purposes.

Worries about Spain's financial and economic woes weighed on oil prices. On Monday, Spain's stock market plummeted while borrowing costs soared amid concern over the bailout of nationalized lender Bankia. Spanish Prime Minister Mariano Rajoy said the country's banking sector would not need an international rescue.

A weakening euro has also pulled oil prices down in recent weeks. A stronger dollar makes commodities priced in dollars, such as crude, more expensive to investors with other currencies.

The euro was steady at $1.2535 on Tuesday.

"Should the euro weaken further, we will look for oil prices to fall as low as $84.94," The Schork Group said.

In other energy trading, heating oil was down 0.1 cent at $2.83 per gallon and gasoline futures added 0.8 cent at $2.84 per gallon. Natural gas fell 6 cents at $2.51 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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