Singapore, June 5:

Oil prices were higher in Asian trade on Monday, extending gains after Iran warned of disruptions to global energy supplies if it was forced to halt its controversial nuclear programme, dealers said.

At 04:00 pm (0800 GMT), New York’s main contract, light sweet crude for July delivery was up $1.17 at $73.50 a barrel from its close of $72.33 in the United States on Friday.

Brent North Sea crude for July delivery was at $72.23, up $1.20.

“The market is bubbling a bit, reacting to the rhetoric from Iranian supreme leader Ayatollah Khamenei about cutting off oil flows through the Straits of Hormuz (at the entrance to the Gulf),” said Victor Shum, a Singapore-based analyst from energy consultancy Purvin and Gertz.

Iran’s supreme leader Ayatollah Ali Khamenei on Sunday rejected demands that his country suspend sensitive nuclear work, vowing the Islamic republic would not buckle in the face of “threats and bribes”.

He also warned the United States that any “mistake” in its dealings with Iran, the world’s fourth largest producer of crude, would lead to consequences for global energy supplies. “If you make a single mistake about Iran, the supply of energy will definitely be put in serious risk,” Khamenei said. Iran is embroiled with the West over its nuclear enrichment activities which Washington and its allies suspect is a clandestine drive to acquire nuclear weapons. Tehran maintains that its nuclear program is strictly for civilian purposes.

“This is just sabre-rattling, it’s more of the same,” Shum said, “What it points to is that there is no immediate resolution to the Iranian issue”. Meanwhile, dealers expect Iran to reject the incentive package proposed by the five permanent members of the UN Security Council and Germany because of the condition that Tehran must first suspend uranium enrichment.

“It looks unlikely that Iran will accept the package because of the condition of suspending uranium enrichment,” Shum said.

In other developments, Nigerian militants released eight foreign oil workers after oil

companies agreed to distribute more wealth to local communities, officials said. The American, Canadian and six Britons were freed unharmed after being held for two days.

“The Nigerian situation with the attacks by the militants is another factor likely to continue to support oil prices,” Shum said. Nigeria is Africa’s largest oil producer and the world’s sixth exporter with an average of 2.6 million barrels a day, derived mostly from the Niger Delta. Militants, unhappy with the distribution of wealth in the region have intensified their campaign in recent months, with oil production reduced by around 20 per cent.