* Israel-Iran tensions, weak dollar lift prices
* Saudi says ready to boost output, raise capacity
* Nigerian militants announce unilateral ceasefire
(Updates prices)
By Fayen Wong
PERTH, June 23 (Reuters) - Oil rose nearly 1 percent on
Monday, as escalating tensions between Israel and Iran stoked
supply concerns and traders doubted Saudi Arabia's promise to
pump more oil, if needed, would turn back the rally.
A vow by Nigerian militants to halt attacks on oil
facilities in the delta barely tempered the rise after two
fresh attacks over the past week knocked out another tranche of
output.
U.S. light crude for August delivery <CLc1> extended early
gains to rise $1.14 or 0.84 percent to $136.50 a barrel by 0508
GMT, reversing an early decline of more than $1. London Brent
crude <LCOc1> rose $1.29 or 0.96 percent to $136.15.
"The market took the opportunity to take profits earlier on
Saudi Arabia's promise... but realistically that alone is not
enough to calm the market," said Mark Pervan, senior
commodities analyst at Australia and New Zealand (ANZ) Bank in
Melbourne.
Oil prices hit a record near $140 a barrel last week and
have doubled from a year ago, stoking inflation and triggering
protests worldwide, and top energy policy makers meeting in
Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia confirmed it will lift production
for a second time to 9.7 million barrels per day (bpd) in July,
its highest in over 30 years, and pledged on Sunday to open the
taps wider still if the market demanded it. []
It also sketched out plans to boost capacity to 15 million
bpd when the future demand warrants the investment, hoping to
soothe growing fears that the world is running out of oil, but
those measures failed to take the edge off an anxious market.
"The short-term supply situation is still very tight and
tensions between Iran and Israel are back in focus," Pervan
said.
Iran will give a "devastating" response to any attack on
the country, its defence minister was quoted as saying on
Sunday, the latest volley in the ongoing war of words centred
around Tehran's nuclear programme. []
On Friday, the New York Times quoted U.S. officials as
saying Israel had carried out a large military exercise,
apparently a rehearsal for a potential bombing of Iran's
nuclear facilities.
Energy experts are concerned any conflict in Iran could
lead to a shutdown of the Strait of Hormuz, a waterway
separating Iran from the Arabian Peninsula through which
roughly 40 percent of the world's traded oil is shipped.
Despite world powers' offer of economic incentives to coax
Tehran into halting such activities, Iran is pressing on with
uranium enrichment "non-stop", its envoy to the U.N. nuclear
agency was quoted as saying on Saturday. []
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to
the ongoing dialogue of major producers and consumers,
participants said, but they acknowledged a lack of hard
measures for taming oil's rally could leave the market
underwhelmed.
"The meeting was a bit disappointing," said a European
diplomat. "The only producer that came up with any concrete
proposals was Saudi Arabia -- all the other producers just made
bland statements about future capacity plans."
In the end Jeddah was overshadowed by news from Nigeria,
where militants in the southern Niger Delta announced a
unilateral ceasefire on Sunday, the end of a week that saw two
new attacks knock an additional 340,000 bpd offline.
Community elders had appealed for the Movement for the
Emancipation of the Niger Delta (MEND) to halt their campaign
of sabotage, which has cut oil output by about 40 percent in
the world's eighth-largest exporter. []
"We are respecting an appeal by the Niger Delta elders to
give peace and dialogue another chance," MEND said, announcing
the unilateral ceasefire from June 24.
Attention later in the day could shift to new indicators on
the economic health of the United States, which consumes nearly
a quarter of the world's oil. Consumer confidence for June and
the Richmond Fed's manufacturing report are both due at 1400
GMT.
The dollar held steady from late U.S. trade on Friday at
107.35 yen <JPY=>, below a four-month high hit last week. The
weak dollar was seen as one factor for the surge in oil prices
and global inflation pressures while adding to the U.S.
economy's housing-led woes.
(Editing by Jonathan Leff and Ramthan Hussain)
