LONDON (Reuters) – Oil rose more than $1 on Monday, partly recouping the previous session’s $5 decline as fighting between Russia and Georgia disrupted some exports from the Caspian region.
But analysts said oil’s gain was tempered by the rising U.S. dollar, which vaulted to a six-month high against a basket of currencies on Monday.
U.S. light crude for September delivery was up 71 cents at $115.91 a barrel by 0912 GMT, off highs of $116.90. London Brent crude rose 70 cents to $114.03.
Oil has shed about $31, or 21 percent, from its peak of over $147.27 struck on July 11 on concerns of a slowdown in demand.
“The military conflict in Georgia is the key factor in pushing up oil prices this morning,” said David Moore, an analyst at the Commonwealth Bank of Australia in Sydney.
“There is also some degree of a technical rebound after oil’s sharp fall on Friday.”
The conflict over South Ossetia has prompted the suspension of shipments of Azeri crude oil and refined fuel from two of Georgia’s ports, Azerbaijan’s state energy firm SOCAR said on Saturday.
Kazakhstan also stopped shipments of its crude from Georgia’s Batumi. Neither Azerbaijan nor Kazakhstan rely on Georgian ports for their exports as both also use crude pipelines.
A major oil pipeline exporting Azeri crude passes through Georgia but was disabled last week on Turkish territory before the conflict erupted.
A fire on the Baku-Tblisi-Ceyhan (BTC) pipeline halted loadings of Azeri Light crude shipped to the Turkish port of Ceyhan.
The blaze on the BTC line will be extinguished on Monday and repairs may take one to two weeks or longer, a source at the pipeline consortium said.
BP has also cut output by at least 400,000 barrels a day at the Azeri-Chirag Gunashli oilfields because of the fire.
Iran, the world’s fourth-largest crude exporter, will not back down on its nuclear stance despite the threat of tighter sanctions, Iranian media quoted a government spokesman as saying on Sunday.
Tensions between Iran and the West over its disputed nuclear programme, and concerns Israel or the United States could attack Iran has been a key driver for oil prices in recent months.
OPEC President Chakib Khelil, speaking on a visit to Iran, urged members of the oil exporters’ group to stick to agreed targets on output.
OPEC is overshooting its informal output target, with Saudi Arabia leading the way after the kingdom pledged to meet rising demand and help tame runaway oil prices. OPEC meets next on Sep. 9.