(Repeating for additional subscribers; no changes)
* Nigerian output loss, Israel-Iran tensions underpin
prices
* Saudi says ready to boost output, raise capacity
* Workers at Chevron's Nigerian operations begin strike
(Recasts first sentence, updates prices, changes dateline from
LONDON)
By Rebekah Kebede
NEW YORK, June 23 (Reuters) - Oil rose on Monday as supply
disruptions in Nigeria and escalating tensions between Israel
and Iran outweighed Saudi Arabia's pledge to raise output and
keep markets well-supplied.
U.S. light crude for August delivery <CLQ8> rose 2.52 cents
to $137.92 a barrel by 1658 GMT in choppy trading between
$134.05 and $138.13 a barrel.
London Brent crude <LCOQ8> was 2.17 cents up at $136.91.
A cease-fire 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.
Some 340,000 bpd of Nigerian output was halted by fresh
militant attacks last week, and more threats to production
emerged on Monday as Nigeria's senior oil workers union began a
limited strike at Chevron. The strike has yet to affect
production.
"Bellicose rhetoric between Israel and Iran and escalated
militancy in Nigeria reduced what little optimism there was
surrounding the Saudi's meeting in Jeddah over the weekend,"
said John Kilduff, senior vice president at MF Global.
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 level of production 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.
"With the immediate benefit of higher Saudi production
seemingly already lost, and with limited visibility on capacity
expansion plans, there seems to be little here to cool prices,"
Citi analysts said in a note.
Analysts said the short-term supply situation was still
very tight, putting tensions between Iran and Israel back in
focus.
Iran said it would give a "devastating" response to any
attack on the country, the latest in a war of words centered on
Tehran's nuclear program.
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 narrow waterway
separating Iran from the Arabian Peninsula through which
roughly 40 percent of the world's traded oil is shipped.
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to
the ongoing dialogue of major producers and consumers,
participants said, but 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 supply, and at the
moment that demand did not exist.
(Additional reporting by Fayen Wong in Pert and Robert Gibbons
in New York; editing by Matthew Lewis)
