Oil Prices Stage Rebound

Updated from 12:29 p.m. EST

Energy prices rebounded Monday as traders focused on continuing supply disruptions in Nigeria and the nuclear standoff with Iran.

Light, sweet crude for April delivery added $1.81, or 3%, to $61.77 per barrel on Nymex, after falling 6% last week. Oil finished at $59.96 Friday, its first sub-$60 close since Feb. 15.

Unleaded gasoline and heating oil each gained 5 cents, or 3%, to $1.74 and $1.73 a gallon, respectively.

"Traders are still nervous about the various global threats to supplies, which trump just about anything else when there are actual incidents of violence or sabotage," said Peter Beutel, president of Cameron Hanover, an energy risk management firm in New Canaan, Conn.

On Sunday, Iran shot down a Russian proposal meant to diffuse tensions with the West over its nuclear activities. Moscow had offered to enrich uranium on Tehran's behalf after the International Atomic Energy Agency referred Iran to the U.N. Security Council for possible punitive measures that could include trade sanctions.

Iran restarted nuclear development after a two-and-a-half-year hiatus last month in defiance of Western threats to slap a trade embargo on the country. Tehran, which has also threatened to cut oil exports as a punitive measure, believes it has latitude with the West because of its status as the second-largest crude producer in OPEC. The country produces 3.9 million barrels of oil per day.

A trade embargo would drastically cut the world's oil supplies and drive up prices. Saudi Arabia, the only country with spare crude, could supply the markets with an extra 1.6 million barrels of spare crude, but it wouldn't be enough to make up for Iran. Many analysts contend that an embargo will never happen because it would lead to high oil prices and damage economies around the world.