* Israel-Iran tensions, weak dollar lift prices
* Saudi says ready to boost output, raise capacity
* Nigerian militants announce unilateral ceasefire
By Santosh Menon
(Updates prices, changes dateline, previous PERTH)
LONDON, June 23 (Reuters) - Oil rose more than $1 on Monday
as escalating tensions between Israel and Iran stoked supply
concerns and as Saudi Arabia's promise to pump more oil if
needed failed to win over a sceptical market.
A ceasefire by rebels halting attacks on facilities in the
Niger delta barely tempered the rise after two new attacks over
the past week knocked out another tranche of Nigerian output.
U.S. light crude for August delivery <CLc1> rose $1.76 to
$137.12 a barrel by 0900 GMT, reversing an early decline of more
than $1. London Brent crude <LCOc1> was $1.99 up at $136.87.
"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. A meeting of top energy policy makers 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 more than 30 years, and pledged on Sunday to pump
even more if the market demanded it. []
It detailed plans to boost capacity to 15 million bpd when
future demand warrants the investment, in a bid to soothe
growing fears that the world is running out of oil, but those
measures failed to allay fears in 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 would give a "devastating" response to any attack on
the country, its defence minister was quoted as saying on
Sunday, the latest in an ongoing war of words centred on
Tehran's nuclear programme.
The New York Times quoted U.S. officials last week as saying
Israel had carried out a large military exercise, in an apparent
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 it nuclear 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."
OPEC President Chakib Khelil said on Monday oil producers
could not pump more without demand for extra suppy, and at the
moment that demand did not exist.
"You know that demand has shrunk this year and continues to
shrink, and so demand is not there to absorb supplementary
production," said Khelil, who is Algeria's energy minister, in
an interview on Algerian state radio.
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.
Attention is likely to shift to new indicators of 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.
(Additional reporting by Fayen Wong in Perth; editing by James
Jukwey)
