LONDON (Reuters) – Oil steadied below $126 a barrel on Monday due to a tropical storm that may threaten oil facilities in the Gulf of Mexico and to concerns over OPEC producer Iran’s nuclear program.
U.S. light crude was trading 67 cents higher at $125.77 by 4:38 a.m. EDT after rising as high as $126.35. Prices have rebounded from $120.42 early last week, after sliding from a record high above $147 hit in mid-July.
London Brent crude rose 72 cents to $124.90.
Traders kept a close eye on Tropical Storm Edouard after it formed near a major oil and gas producing area of the northern Gulf of Mexico on Sunday, the U.S. National Hurricane Center said.
“The market still looks firm, although it is down from highs,” a broker said. “Iran and Edouard are the main points to keep an eye on.”
The storm was expected to come ashore at close to hurricane strength in a few days on the Texas coast. Much of U.S. offshore oil production was in the likely path of the storm, which could also threaten Gulf Coast refineries.
Oil firms, including Royal Dutch Shell and ExxonMobil Corp, said on Sunday production was unaffected so far, while they were preparing for possible evacuations of workers and temporary output shutdowns.
Tensions around Iran, the world’s fourth largest oil producer, were in focus on the oil market as the country’s Revolutionary Guards said on Monday they had tested a naval weapon, according to a report in Iranian media.
Tehran failed to meet Saturday’s informal deadline to respond to a package of incentives offered by six world powers to defuse its disputed nuclear programmes.
Iran’s foreign ministry spokesman said it would meet the six powers.
Israel’s Deputy Prime Minister Shaul Mofaz said on Friday that Iran was heading toward a major breakthrough in its nuclear programme.
Limited support came from the world’s eighth largest oil exporter Nigeria, where recent militant attacks have cut about a fifth of its oil production.
Gunmen kidnapped two French expatriates near the country’s oil industry hub of Port Harcourt in the restive Niger delta, military and security sources said on Sunday.