LONDON (Reuters) -Oil rose above $74 a barrel on Tuesday, pushed higher by persistent fears about supply disruption, especially from Iran, and aggressive fund-buying across the commodities sector.
U.S. light, sweet crude rose 54 cents to $74.24 a barrel by 1045 GMT, while London Brent crude gained 45 cents to $74.34.
Both contracts climbed more than $1.80 a barrel on Monday.
Prices are close to the record high of $75.35 for U.S. crude touched in April, which was largely driven by concern Iran’s ongoing stand-off with the West over its nuclear program could lead to disruption of its oil output.
U.N. ambassadors from the United States, Britain and France are expected this week to introduce a Security Council resolution to make Iran, the world’s fourth biggest oil exporter, comply with demands to halt uranium enrichment.
Iran’s Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian said on Tuesday there was “some possibility” of a U.S. attack on his country over its nuclear weapons program.
He also warned crude oil prices could exceed $100 a barrel by winter as supplies cannot be increased in the short term.
Apart from Iran, the shut-in of around a quarter of Nigeria’s crude because of militant unrest has also boosted interest in the oil futures market and helped to lure investment class and hedge fund money, which has flooded in across the commodities complex.
“We notice oil has been rallying at the same time as copper and gold,” said Deborah White of SG CIB in Paris. “That we think has to do with the funds.”
But she said there were also fundamental issues, including Iran and Nigeria, and the latest bullish news was Bolivian nationalization, which has stoked concern about the difficulty of accessing the world’s energy reserves.
President Evo Morales ordered the military to occupy Bolivia’s natural gas fields on Monday after nationalizing the industry and threatening to expel foreign companies that do not recognize state control.
Saudi Arabia, the world’s biggest oil exporter, said current price strength was not the result of inadequate supplies.
“These prices are too high and we don’t seek them,” Saudi Oil Minister Ali al-Naimi said on Monday.
But he also predicted continued demand for crude and products despite the high costs.
“I don’t think demand destruction will be a concern,” he said.
Strong demand in the United States was expected to lead to a draw-down in U.S. gasoline inventories, all important in the run-up to the U.S. driving season, for the ninth week in succession.
U.S. government data will show a 300,000 barrel draw in gasoline inventories, while crude stocks and distillates, which include diesel, are expected to shrink by 100,000 barrels, according to a Reuters poll of analysts.