(Updates prices adds details)
* Oil rises as Iran-Israel tension returns to focus
* Eyes on European c.bank meeting, U.S. oil inventories
* Saudi says ready to supply all customer needs
SINGAPORE, July 1 (Reuters) - Oil rose more than $1 on
Tuesday after slipping from a record above $143 a day ago, as
tension surrounding Iran's nuclear programme returned to focus
and outweighed concerns over eroding U.S. demand.
U.S. crude <CLc1> rose $1.15 cents to $141.15 a barrel by
0607 GMT, while London Brent crude <LCOc1> rose $1.08 cents to
$140.91.
Fears of oil supply and flow disruption in the Middle East,
as the Iran-Israel row over Tehran's nuclear developments
escalates, had helped pushed oil to a $143.67 peak on Monday.
"The market has been worried about the tensions involving
Iran and that remains a supportive factor for the oil price,"
said David Moore, a commodities analyst at the Commonwealth
Bank of Australia in Sydney.
In a war of words between the Iranian and U.S. military,
Iran's Revolutionary Guard said Tehran would impose controls on
shipping in the Middle East Gulf and Strait of Hormuz if it
were attacked.
The U.S. Navy's Fifth Fleet said the United States and its
allies would not allow Iran to hamper shipping in the Gulf.
Roughly 40 percent of the world's traded oil moves through
the narrow waterway separating Iran from the Arabian Peninsula.
The ongoing dispute in the Middle East countered concerns
over falling demand in the world's top oil consumer, the United
States, as the impact of soaring fuel costs sets in.
The U.S. Energy Information Administration revised downward
U.S. April oil demand by 863,000 barrels per day (bpd) to 19.77
million bpd -- 3.9 percent below year-ago levels.
The revision, which showed April demand was the lowest for
the month since April 2002, came even before gasoline prices
surged to new records in June. []
Oil prices have jumped around seven-fold since 2002 as part
of a broader commodities rally sparked by surging demand from
emerging economies like China and India, but have also driven
inflation higher around the world.
On Monday, official data showed that euro zone inflation
leapt to a record 4.0 percent in June, cementing expectations
that the European Central Bank will raise interest rates when
it meets on Thursday. []
Analysts said the move would drive the U.S. dollar lower
and trigger more cash injections into crude from investors
seeking to hedge against the slumping U.S. currency.
Speculative hedge fund inflows have already helped lift oil
prices more than 40 percent higher this year.
Saudi Oil Minister Ali al-Naimi reiterated his country's
position that oil prices were being driven mostly by
speculation and said the OPEC kingpin was prepared to supply
all the oil its customers needed. []
Oil prices would not ease even if production was raised,
Saudi Arabia's King Abdullah was quoted as saying in a Kuwaiti
newspaper on Tuesday. He said speculators and duties on fuel in
some countries were among reasons for high
prices.[].
But the heads of some of the biggest oil companies said at
an oil conference in Madrid that fundamentals, not investor
flows, were the main driver of prices. []
On Wednesday, traders will be eyeing weekly U.S. oil
inventory data, which was expected to show a drop in crude
stocks and a build in distillates and gasoline for the week
ending June 27. []
(Reporting by Chua Baizhen and Luke Pachymuthu, Editing by
Sanjeev Miglani)
