Updated from 2:03 p.m. EDT
Oil prices rebounded Monday amid more Iranian threats to halt crude exports and refinery disruptions on the Gulf Coast.
Light, sweet crude for August delivery gained 93 cents to close at $71.80 a barrel. Energy shares followed crude higher, rising 1% on the Amex Oil Index and the Philadelphia Oil Service Index.
"If the country's interests are attacked, we will use oil as a weapon," Hazem Vaziri Hamaneh, Iran's oil minister, said on Sunday, the
After a two-year hiatus, Iran restarted nuclear development activities in defiance of Western threats of economic sanctions and possible military attacks. The West claims Iran's nuclear development activities is a facade for weapons development, while Iran contends the nuclear energy is meant for civilian purposes.
The U.S. and its allies have been awaiting Iran's response to an incentives package designed to persuade it to halt uranium enrichment. Last week, Iran said it would reply to the proposal by mid-August, which some European diplomats have said is too long to wait.
If Iran reduced oil exports, prices would soar above $100 a barrel, Hamaneh said. Iran is the world's fourth-largest crude producer with daily production of around 4.4 million barrels.
Oil prices have risen 15% this year thanks to production cuts in Nigeria, lower output in the Gulf of Mexico and fear that crude exports from Iran will be cut. On Sunday, two Filipino oil workers were released by Nigerian militants.
Earlier in the session on Monday, oil prices got some relief on the announcement of higher Iraqi production. Iraq is currently producing 2.5 million barrels per day, the highest level in the past three years, and is expected to nearly double by the end of the decade, the country's oil minister said Monday. By 2015, Hussain al-Shahristani said, Iraq could be producing as much as Saudi Arabia, the world's largest oil producer. The claim, though, was discounted by analysts who said the goal was too optimistic.
A lack of hurricanes in the Gulf of Mexico and Atlantic Ocean was also dragging down prices earlier today. The hurricane season began June 1 and ends Nov. 30. Ten months after Hurricane Katrina shut down much of the Gulf Coast's oil and natural gas production, around 12% of the region's oil output and 9% of its natural gas production is still down.
Gasoline prices inched up 5 cents to $2.17 a gallon on higher demand and an expectation supplies will finally start dipping after eight straight weeks of increases. Gasoline inventories have climbed as refiners have ramped up production to meet demand during the peak summer driving season.
Despite high prices, gasoline consumption has been rising as millions of Americans take to the roads for summer vacations. The U.S. Energy Department reported last week that demand inched up 0.9% to 9.4 million barrels per day over the past four weeks.
A Louisiana shipping channel that links to Lake Charles, a refining center, was still closed to tanker traffic Monday as clean-up of an oil spill continued. A liquefied natural gas terminal and three refineries operated by Citgo,
and the Calcasieu Refining Co. were operating at reduced rates.
Heating oil picked up 2 cents to settle at $1.97 a gallon. Mild temperatures in the Northeast and lower demand for air conditioning was driving down natural gas prices by 26 cents to $5.97 per million British thermal units. Many utilities use natural gas to generate electricity, which is used to power air conditioners and heaters.
Meanwhile, in trading Monday, shares of refiners and exploration companies gained ground, with the Amex Oil Index climbing 1.5%.
were leading the increases on the Amex Oil Index.
Among service companies,
were posting the largest increases.