Wednesday, May 17 2006 12:55 Hrs (IST) - World Time -

Singapore: Oil prices inched towards 70 dollars a barrel in Asian trade today (May 17,2006), supported by continuing concerns over the geopolitical situation in major crude producers Iran and Nigeria, dealers said.

At 0845 hrs IST (11:15 am), New York's main contract, light sweet crude for June delivery, was 19 cents higher at 69.72 dollars from late trades of 69.53 dollars in the United States yesterday.

"There are bullish (positive) elements in the market and I think the market has more upside potential than downside potential," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

"We have the geopolitical issues; these things have not changed," he said, referring to Iran and Nigeria as the market's main area of concern.

Iran's hardline President Mahmoud Ahmadinejad has rejected any new offer from the European Union requiring the Islamic republic to halt uranium enrichment.

Europe and the United States are considering helping Iran acquire a light-water nuclear reactor in return for Tehran's giving up uranium enrichment as a guarantee that it will not make atomic weapons, diplomats said yesterday.

UN sanctions could follow if Iran does not accept the deal, the diplomats told sources.

Investors fear oil supply from Iran, the world's fourth biggest producer with output of four million barrels a day, may be disrupted should Tehran cut its production if hit with UN sanctions.