Jan. 19 (Bloomberg) -- Crude oil jumped to a four-month high as concern that resumption of Iran's nuclear research program may reduce oil shipments overshadowed surging U.S. stockpiles.

The U.S., the U.K., France and Germany want the United Nations Security Council to discuss Iran's program, a move that may result in sanctions. France will develop its nuclear forces to counter states that might resort to using weapons of mass destruction, President Jacques Chirac said. The government reported an unexpected rise in U.S. oil supplies.

``The market is incredibly tense because of the geopolitical situation,'' said Jim Steel, director of commodity research at Man Financial Inc. in New York. ``Chirac's statement about using nuclear weapons against terrorist attacks is increasing the pressure and is probably pointed at Iran.''

Crude oil for February delivery rose $1.10, or 1.7 percent, to $66.83 a barrel on the New York Mercantile Exchange, the highest close since Sept. 19. Oil is down 5.7 percent from a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina struck the U.S. Gulf of Mexico coast. Prices are up 41 percent from a year ago.

Oil rose as high as $67.08 a barrel at 3:46 p.m. New York time in after-hours electronic trading on the exchange.

Brent crude oil for March delivery rose $1.04, or 1.6 percent, to $65.23 a barrel on the London-based ICE Futures exchange, formerly the International Petroleum Exchange. It was the highest close since Sept. 19.

`Incredibly Bearish'

``The fundamentals point to lower prices,'' Steel said. ``These inventory numbers are incredibly bearish and under other circumstances would send prices substantially lower.''

Crude-oil stockpiles rose 2.7 million barrels to 321.4 million in the week ended Jan. 13, according to the Energy Department. A fall of 235,000 barrels was expected, a Bloomberg News survey of 14 analysts showed. Inventories were 12 percent above the five-year average for the week, the department said.

Gasoline inventories jumped 2.9 million barrels to 211.6 million, the highest since the week ended July 8, the report showed. Analysts forecast a gain of 2 million barrels, according to the median of responses. Stockpiles were 0.7 percent higher than the five-year average.

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 911,000 barrels to 134.7 million, the highest since the week ended Aug. 26, according to the department. A 2.1 million barrel increase was forecast. Inventories were up 5.1 percent from the five-year average.

Heating oil for February delivery surged 4.14 cents, or 2.4 percent, to $1.7969 a gallon in New York, the highest close since Jan. 6. Futures are 34 percent higher than a year ago. Gasoline for February delivery rose 0.27 cent to close at $1.776 a gallon in New York. Prices are 41 percent higher than a year ago.

`New Money'

``There is a lot of new money coming into the market,'' said Peter Beutel, president of Cameron Hanover Inc. in New Canaan, Connecticut. ``With the Iran nuclear standoff and the threat of Nigerian supply disruptions there is a lot to worry about.''

In Nigeria, rebels in the main oil-producing region, the Niger river delta, have attacked pipelines and a pumping station in the past week. They threatened to carry out more attacks on oil companies, Sky News reported two days ago.

Nigeria produced 2.5 million barrels of oil a day last month, about 3 percent of world output, according to Bloomberg News figures. Iran produced 3.9 million barrels of crude oil a day last month, almost 5 percent of world output. Saudi Arabia, the world's biggest oil exporter, has 1.3 million barrels a day of spare production capacity.

Investor Interest

Commodities have had better returns than other financial instruments over the past year, attracting investors. The Reuters Jefferies CRB Index, which tracks commodity futures, is 21 percent higher than a year ago and touched a record 342.65 yesterday.

Hedge funds and other large speculators have decreased net- short positions, or bets that Nymex crude futures will fall, according to U.S. Commodity Futures Trading Commission data for the week ended Jan. 10. Net-short positions fell to 722 from 14,403 a week earlier.

``The speculative money is pouring into the market,'' said Michael Fitzpatrick, vice president of Energy risk management at Fimat USA in New York. ``This business with Iran, the unrest in Nigeria, even today's Osama tape, have encouraged buying by the funds.''

The voice on an audiotape warning of more al-Qaeda attacks against the U.S., while offering a ``long-term'' truce, is that of Osama Bin Laden, a CIA spokeswoman said. Al-Jazeera aired several segments of the tape, which was addressed to ``the American people.''

Rejected Proposal

France yesterday rejected an Iranian proposal to resume talks with the European Union on the Islamic republic's nuclear program until the country suspends nuclear research that it resumed on Jan. 9.

``The leaders of states who might resort to terrorist means against us, and those who might envision using arms of mass destruction, must understand that they would be exposed to a firm and adapted response on our part,'' Chirac said today at a nuclear base near Brest, on the Atlantic coast of Brittany.

Iranian President Mahmoud Ahmadinejad, who maintains that his nation has no intention of making nuclear weapons, said in October that Israel should be ``wiped off the map.''

The world is witnessing ``statements of power that rest on the possession of nuclear, biological or chemical weapons,'' Chirac said. ``Out of this stems the temptation of some states to acquire a nuclear capability.''

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: January 19, 2006 15:56 EST