Crude Oil Rises After Nigerian Militants Claim Pipeline Attacks

By Grant Smith

July 28 (Bloomberg) -- Crude oil rose, rebounding from a seven-week low in New York, after a Royal Dutch Shell Plc pipeline in Nigeria was attacked by militants.

The incident occurred on the Nembe Creek trunk line in Rivers State, Shell spokeswoman Caroline Wittgen said. The rebel group, the Movement for the Emancipation of the Niger Delta, or MEND, claimed responsibility for damaging two pipelines in an e- mailed statement.

``News that Nigerian militants attacked two Shell pipelines has firmed prices this morning,'' said Rob Laughlin, London- based senior broker at MF Global Ltd. ``This comes as the geopolitical risks flare elsewhere with bombs in Istanbul and tough talking from Iran.''

Crude oil for September delivery gained as much as $1.56, or 1.3 percent, to $124.82 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $124.65 a barrel at 10:22 a.m. London time.

Brent crude oil for September settlement rose as much as $1.48, or 1.2 percent, to $126 a barrel on London's ICE Futures Europe exchange, and traded at $125.87 at 10:23 a.m. London time.

The attacks occurred at 1:15 a.m. local time, MEND spokesman Jomo Gbomo said in the statement. Assaults on Nigerian oil facilities have cut output by 20 percent since 2006 and reduced the country to Africa's second-largest producer after Angola.

This year's 30 percent climb in oil led to an 85 percent decline in first-quarter profit at Ryanair Holdings Plc, Europe's biggest discount airline. Other carriers, led by UAL Corp.'s United Airlines, have cut fleets because of fuel costs.

Iran, Israel

Prices had risen to an all-time high on speculation supplies from the Middle East may be disrupted should Iran's nuclear work prompt Israel or the U.S. to resort to military action.

Still, oil has tumbled about $23 a barrel from the record $147.27 a reached on July 11 on concern that record prices have cut demand for fuel in the U.S., the world's largest energy consumer.

Iran's President Mahmoud Ahmadinejad said his country has 6,000 uranium-enriching centrifuges, the Associated Press reported yesterday. The Middle East's second-largest producer has threatened to blockade the Straits of Hormuz, an export channel for a quarter of the world's oil, if its nuclear facilities are targeted.

Two bombs exploded in Istanbul yesterday, killing 16 people and injuring more than 100 in Turkey's worst terrorist attack since al-Qaeda bombed the British consulate and HSBC Holdings Plc's offices in 2003.

Turkish military strikes on rebels operating in the north of Iraq, the country with the third-largest crude reserves, have raised concern that Iraqi supplies may be disrupted.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.