(Updates prices)
* IEA curbs demand forecast, but also expects less supply
* Tension between Israel and Iran
* Saudi says will pump more oil but not sell at discounts
By Ikuko Kao
LONDON, July 1 (Reuters) - Oil rose by nearly $3 on Tuesday
after the International Energy Agency revived concerns about
long-term supply shortages and tension between Israel and Iran
raised fears about possible outages in the much nearer term.
U.S. crude <CLc1> rose $1.96 to $142.96 a barrel by 1505
GMT. London Brent crude <LCOc1> rose $2.17 to $142.00.
On Monday, U.S. crude hit an all-time high of $143.67 a
barrel, but later eased, with traders citing evidence high
prices were eroding demand, especially in the United States.
On Tuesday, the IEA's medium-term outlook said world oil
demand would rise less than previously forecast, but it also
said supply would be tighter than anticipated.
"The IEA report today was a little bit bearish on the demand
side, but on every other side, it was a little bit bullish,"
said Christopher Bellew of Bache Financial.
He also cited tension between Israel and OPEC's second
biggest oil producer Iran.
Speculation has mounted that Israel plans to attack Iran's
nuclear facilities, which Iran says are for purely peaceful
purposes, following a big Israeli air force exercise last month.
Iran's Revolutionary Guards said Iran would impose controls
on shipping in the Strait of Hormuz if the country were
attacked, a newspaper reported at the weekend.
Roughly 40 percent of the world's traded oil moves through
the narrow waterway separating Iran from the Arabian Peninsula.
"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.
SAUDI ARABIA
Oil prices have risen by more than 40 percent so far this
year.
Top exporter Saudi Arabia is willing to provide as much as
its customers need, Oil Minister Ali al-Naimi said on Tuesday.
[]
The influential Saudi oil minister does not like record oil
prices above $142 a barrel, but he said the kingdom would not
cut the price of its crude to tame international oil prices.
Saudi Arabia's crude is sold at official prices set by a
state-run oil firm. "We have said more than once we don't like
these high prices ... We have nothing to do with where the price
is today," Naimi said.
High oil prices have been eroding fuel demand especially in
the United States, the world's largest oil consumer.
The U.S. government said on Monday domestic oil demand in
April was the lowest for that month since 2002.
The next set of data from the U.S. government, to be
released on Wednesday, is expected to show a 200,000-barrel fall
in overall crude stocks, according to a Reuters poll of
analysts. []
(Additional reporting by Chua Baizhen and Luke Pachymuthu in
Singapore; editing by James Jukwey)
