* Oil rises as IEA cuts supply forecasts
* Israel-Iran tensions support
* Saudi says will pump more oil but not sell at discount
(Updates throughout, changes dateline from LONDON)
NEW YORK, July 1 (Reuters) - Oil prices rose on Tuesday on
forecasts that global supplies will struggle to keep pace with
demand and rising tensions between Israel and Iran, a major oil
producer.
U.S. crude <CLc1> traded $2.60 higher at $142.60 a barrel,
close to the record $143.67 hit Monday, by 12:20 p.m. EDT (1620
GMT). London Brent crude <LCOc1> gained $2.90 to trade at
$142.73 a barrel.
The International Energy Agency on Tuesday forecast global
oil supply capacity will reach 95.33 million barrels per day by
2012, some 2.7 million bpd less than its previous forecast a
year ago. []
The cut offset downward revisions to expected demand as
high prices bite into fuel use in some consumer nations, such
as the United States. The U.S. Energy Information
Administration on Monday slashed U.S. oil demand figures for
April, knocking oil from its record peaks.
"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.
Concerns that tensions between Israel and Iran could
disrupt supplies from the Organization of Petroleum Exporting
Countries' second biggest oil producer also supported prices.
Speculation has mounted that Israel plans to attack Iran's
nuclear facilities, which Tehran says are for purely peaceful
purposes, following a big Israeli air force exercise last
month.
The U.S. State Department on Tuesday criticized reported
comments by an unidentified senior U.S. defense official who
told ABC News there was an increasing likelihood Israel would
attack Iran over its nuclear program. []
Iran's Revolutionary Guards said Iran would impose controls
on shipping in the Strait of Hormuz, if the country were
attacked, a newspaper reported over the weekend. About 40
percent of all seaborne oil trade passes through the Strait of
Hormuz, accoring to the EIA.
OPEC President Chakib Khelil said on Tuesday the cartel did
not have enough spare capacity to replace Iranian oil, if
Tehran were to cut exports due to an attack. []
Oil prices have jumped nearly seven-fold since 2002 as
supplies struggle to keep pace with demand from emerging
markets like China.
In addition, a surge in cash flows from investors seeking
to hedge against the falling dollar and inflation have helped
support a 40 percent rise in prices this year alone.
Ali al-Naimi, oil minister for OPEC kingpin Saudi Arabia,
said on Tuesday his country was willing to provide more oil to
markets, if needed, but he added it would not discount crude
prices to encourage buying.
"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.
Analysts have said the kingdom, one of the few OPEC
countries with substantial spare oil capacity, could help bring
down the soaring crude market by cutting prices to a level that
would encourage energy companies to build up inventories.
OPEC insists markets are well supplied and it has blamed
rising crude prices on speculation.
Weekly U.S. oil inventory data, due on Wednesday, is
expected to show a 200,000-barrel fall in overall crude stocks
and a build in refined products stockpiles, according to a
Reuters poll of analysts. []
(Reporting by Matthew Robinson and Robert Gibbons in New York;
Ikuko Kao in London; Chua Baizhen and Luke Pachymuthu in
Singapore; Editing by Walter Bagley)
