Oil prices rise as Iran resumes uranium enrichment

Oil prices surged on Monday after Iran resumed uranium enrichment and ended United Nations checks of its nuclear sites in response to being reported to the Security Council over concerns it is building nuclear weapons.

Photo: Oil prices rise as Iran resumes uranium enrichment

Despite past assurances from Tehran that it will not use oil as a political weapon, dealers fear that deteriorating relations and intensified rhetoric on both sides could lead to a disruption in supplies from the world's fourth-largest exporter.

U.S. light crude jumped as much as $1.25 a barrel in early trade and was last trading up 99 cents, or 1.5 percent, at $66.36. London Brent crude gained $1.11 to $64.50.

"While (Iran) said last week it would separate nuclear and oil as issues, it was only last year it said oil could be used as a weapon to get its own way on nuclear," said David Thurtell, commodity strategist at the Commonwealth Bank of Australia.

"This all adds fuel to the fire for those concerned about oil supply." Oil prices have surged since late December amid a fresh infusion of investment from big-money funds and rising geopolitical concerns over Iran and Nigeria.

They touched $69.20 a barrel on January 23, nearing last August's record peak of $70.85, but have since faded as U.S. refiners rebuild gasoline inventories and maintain healthy stocks of crude and heating oil, thanks partly to mild winter weather.

Iran reacted swiftly to Saturday's International Atomic Energy Agency decision to report it to the Security Council, even though the top U.N. body will take no action until the IAEA delivers a full report in March, reports Reuters.

I.L.