Oil prices have climbed back to $68 a barrel on Iran, Nigeria worries

From Reuters (all emphasis and external links mine):

IRAN NERVES

The United States said on Sunday its priority was to seek a diplomatic solution to the dispute with Iran, but it did not rebuff a report in New Yorker magazine that it had stepped up military planning.

The Washington Post reported the United States was studying options for strikes against Iran [but see here], the world's fourth biggest oil producer, as part of a broader strategy of coercive diplomacy.

"The statement fell short of an outright denial, leaving market fears free to grow," Kevin Norrish, an analyst at Barclays Capital, wrote in a report.

European foreign ministers were to review their options for possible restrictive measures against Iran on Monday, including eventual financial sanctions.

"The market had become a bit too comfortable, expecting a diplomatic solution in Iran," said Tobin Gorey, commodities strategist at the Commonwealth Bank of Australia in Sydney.

Iran says it wants nuclear technology for power generation while Washington believes it is trying to build an atomic bomb.

NIGERIAN UNCERTAINTY

Uncertainty about the return of around 500,000 barrels per day of high-quality Nigerian oil, shut since February by rebel attacks, is also supporting prices.

The loss of gasoline-rich Nigeria oil looks likely to extend into the U.S. summer driving season, the period of peak motor fuel demand in the world's top consumer. [Did you know that much of our gas comes from the Niger Delta?]

Royal Dutch Shell [...], operator of about 90 percent of the lost Nigerian output, was still unable on Monday to give timing for the restart of its 115,000 bpd, offshore EA field. Shell said it could begin assessing EA as early as this week.

More importantly for consumers, analysts say Shell's 340,000 Forcados onshore field and terminal is likely to be shut for some time amid militant threats of further violence.

"Even if EA comes back there will still be around 400,000 bpd of light sweet crude shut in. As refineries are ramping up and we're getting closer to the U.S. driving season, that has to be bullish," said Calyon's Wittner.

It may not seem like it now, but Nigeria is going to become a serious national security issue for the United States.