Oil prices climb above US$62 a barrel as tensions between Iran and the West rise

Oil prices rose above US$62 a barrel in Asian trading Monday on continued tensions between Iran and the West following Iran's detention of British naval personnel.

British Prime Minister Tony Blair on Sunday called the Iranian seizure of the 15 sailors and marines "unjustified and wrong," saying that London saw their situation as "very serious." Iran suggested that the group may be tried for illegally entering Iranian waters.

Light, sweet crude for May delivery rose 37 cents to US$62.65 a barrel in electronic trading on the New York Mercantile Exchange mid-afternoon in Singapore.

The contract hit a 3-month high last Friday to close at US$62.28 a barrel after Iran detained the sailors, sparking concerns that an escalation in the conflict could cut Persian Gulf oil exports.

Brent crude contract for May delivery gained 38 cents to US$63.56 a barrel on the ICE Futures exchange in London.

Western tensions with Iran also increased after the United Nations voted Saturday to impose new and tougher sanctions against Iran for its refusal to stop enriching uranium - a move intended to show Tehran that defiance will leave it increasingly isolated.

Iranian President Mahmoud Ahmadinejad vowed Sunday that the latest U.N. sanctions would not halt the country's uranium enrichment "even for a second."

While the oil market may seem to have factored in the violence in Iraq and issues surrounding it, the latest events in Iran have kept oil prices elevated, said Andrew Harrington, an analyst with ANZ Global Natural Resources in Sydney.

"Now we're looking at a situation where some of that political risk premium is coming back into oil prices," he said.

"(The tension between Iran and the U.K.) adds another element which the energy market will have to take into account. It complicates issues. It is one of those unusual type of situations that then causes people to reassess where they stand," Harrington said, reports AP.

The West strongly suspects Iran's nuclear activities are aimed at producing weapons though Tehran says they are exclusively for the production of energy, reports AP.

In other Nymex trading, heating oil futures gained 1.29 cents to US$1.7240 a gallon (3.8 liters) while natural gas prices added a cent to US$7.279 per 1,000 cubic feet.

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