Oil prices approached the $70-a-barrel mark in the second week of April, as the market reacted to Iran's statement of nuclear defiance. Continued shut-offs in Nigeria and a tight US gasoline market are helping to keep prices high. Spot Brent was trading at $68.74 a barrel on 12 April, compared with $66.93 a barrel a week earlier.
Iran's President Ahmadinejad announced on 11 April that the country had for the first time successfully enriched uranium, prompting condemnation from the US and oil market jitters over fears of UN sanctions or even military confrontation. The issue has been providing constant support to high oil prices for several months.In spite of negotiations between the government and militants in the Niger Delta, significant amounts of Nigerian production remain shut off, depriving the US of light sweet crude.The American product market is already tight, with traders concerned about lack of gasoline and the ethanol required to blend with it, in advance of the phasing-out of methyl tertiary butyl ether (MTBE) as an additive in May.And weather forecasters are already raising fears of an even more active summer hurricane season than in 2005. About 300,000 barrels a day (b/d) of Mexican Gulf production is still off stream as a result of hurricane damage last year.Concerns about spare capacity are a more fundamental reason behind sustained price highs. Qatar's Second Deputy Premier and Energy & Industry Minister Abdulla bin Hamad al-Attiya said in early April that OPEC members were ready to boost capacity but that a lack of clarity existed about demand. 'Yes, we can invest, yes we are ready to increase output, but we also need some signals that the market will absorb all this new capacity,' he said.