Oil hovers around 100-dollar mark in Asian trade

World oil prices rose to near 100 dollars a barrel in Asian trade Monday, with Turkey's military offensive in northern Iraq and reports Iran would back an OPEC output cut sparking fresh concerns, dealers said.

In morning trade, New York's main contract, light sweet crude for delivery in April, was up 70 cents to 99.51 dollars per barrel.

The contract closed 58 cents higher at 98.81 dollars a barrel during floor trading on Friday at the New York Mercantile Exchange.

Brent North Sea crude for April delivery gained 76 cents to 97.77 dollars a barrel, after settling 77 cents higher at 97.01 dollars on Friday.

"Fresh geopolitical tensions in Turkey, Iraq and Iran have been driving prices up since Friday," said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.

Turkey confirmed Thursday that it had sent troops into northern Iraq to hunt down militants from the Kurdish Workers' Party after Turkish fighter jets struck at their bases.

But Iraqi exports of 300,000 barrels of oil per day through Turkey have not been affected, the Iraqi oil ministry said Saturday.

Iraq's northern oil fields are connected to the Turkish port of Ceyhan by a pipeline that crosses the two countries' border in northern Iraq's autonomous Kurdish region, where Turkish troops are fighting separatist rebels.

Most of Iraq's oil, a further 1.6 million barrels per day, is exported through the southern port of Basra.

Iran's Oil Minister Gholam Hossein Nozari meanwhile said on Saturday that Tehran would back a plan to cut oil production at next month's Organisation of Petroleum Exporting Countries (OPEC) meeting, the oil ministry news agency Shana said.

OPEC energy ministers meet in Vienna on March 5.

"In reality, it is going to be difficult for OPEC to really cut production levels if prices stay between the 90-100 dollar range," said Shum.

OPEC earlier this month left its official daily output ceiling at 29.67 million barrels despite US calls for an output increase to reduce high oil prices that Western countries fear will stunt economic growth and further fuel inflation.

Agence France-Presse - 2/25/2008 3:43 AM