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Updated from 10:32 a.m. EST

Energy prices jumped Friday, boosted by renewed concerns about the situation with Iran.

Light, sweet crude for March delivery closed up $1.50 to $67.76 a barrel after U.S. Secretary of State Condoleeza Rice demanded U.N. action on Iran Thursday night.

"On Iran, we have been very clear that the time has come for a referral to the Security Council," Rice told reporters in Washington,



Earlier this month, Iran resumed nuclear research, ostensibly to produce more energy for civilian use. The West suspects that Iran has a more sinister purpose, possibly nuclear weapons. Rice's comments could ruin Chinese and Russian attempts to mediate the dispute and antagonize Iran further. A referral to the U.N.'s nuclear watchdog could mean possible economic sanctions against Iran.

Energy traders are worried such a move would cut crude supplies and push oil prices to new heights. Iran currently pumps 3.9 million barrels a day, or about 13% of the Organization of Petroleum Exporting Countries' total. Saudi Arabia, the group's largest producer, would not be able to make up the difference, because it has only 1.5 million barrels of spare capacity.

Traders have also been concerned that escalating militant attacks on Nigeria's petroleum infrastructure could also affect global supplies. Nigeria is the fifth-largest supplier of crude to the U.S. and has lost about 10% of its average production of 2.2 million barrels over the past month because of the attacks.

"This is a financial, fear-driven market," said Kyle Cooper, an analyst with Citigroup World Markets in Houston. "It is not fundamental, nor has it been since early 2003, when prices and inventories began rising in tandem. It takes very little for prices to rise."

The February contract for natural gas, which expires Friday, increased 17 cents to $8.40 per million British thermal units after floating between $8.20 and $8.64 MBTUS.

"It was crazy because of the expiration," said Thomas Marcotte, a natural gas broker with ICAP Energy in New York.

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Despite the slight rise, natural gas has lost 21% since the start of the year because of mild weather and reduced heating demand.

Heating oil, used to warm homes, picked up nearly 3 cents to $1.80 a gallon on Friday and helped give some support to falling natural gas prices. On average this year, heating oil has been about 40% more expensive than natural gas. Unleaded gasoline added 5 cents to $1.73 a gallon.

Oil prices are expected to remain high in the near future even though supplies are at high levels. On Friday, Saudi Arabia's oil minister, Ali al-Naimi, said he doubted prices would fall, citing political tensions and refining shortages.

"Of course, I want them to come down, but they are not going to come down because there are many issues besides demand and supply," Naimi told


in a visit to New Delhi.

Naimi's comments comes before OPEC, which pumps 40% of the world's crude, meets Tuesday in Vienna. Speculation has been swirling over whether the group of 11 oil-producing countries will slice or maintain production levels. OPEC has delayed output cuts to help Northern Hemisphere countries limp through the winter on lower supplies.

Hurricane damage in the Gulf of Mexico shut down much of the area's refineries, platforms and pipelines last fall, and output has been restored slowly. Production was expected to return to full capacity early this quarter, but has been pushed back to the middle of this year. About 17% of the gulf's natural gas and 25% of its oil production still remains offline.

Hurricane damage has dampened fourth-quarter profits at energy companies and promises to affect earnings this quarter, too.


reported its downstream or transportation and refining earnings fell 25% to $808 million in part because some of its refineries still remain offline. Almost five months after Hurricane Katrina hit the Gulf Coast, nearly half of the company's gulf production still remains offline.


's refining income fell 24% from the third quarter because hurricane damage boosted costs and cut reduced production. Conoco's Alliance refinery in Belle Chasse, Louisiana, which processes 257,000 barrels per day, is currently running at half of its capacity.