Jan. 16 (Bloomberg) -- Crude oil approached a three-month high in London as rebel attacks on oil equipment escalated in Nigeria and diplomats worked on a timetable to refer Iran to the United Nations over its refusal to abandon nuclear research.

Disruptions to output in Nigeria, Africa's largest oil producer, and possible UN sanctions against Iran, the world's fourth-largest exporter, highlight the vulnerability of world supply as demand grows, said Mike Wittner, the London-based head of energy market research at Calyon, a unit of Credit Agricole SA.

``The reason we worry about political risk is that it has a chance to become a real fundamental factor, like it happened in Nigeria, where you lost some real supply,'' Wittner said. ``The spare capacity issue for refining and crude production still underlies everything because demand is still healthy.''

Brent crude oil for February rose as much as 92 cents, or 1.5 percent, to $63.18 a barrel and was up 52 cents at 1:45 p.m. on London's ICE Futures exchange, where prices reached $63.28 last week, the highest level since Oct. 3. Brent crude reached a record $68.89 in August, after Hurricane Katrina struck the U.S.

The Brent contract for February settlement expires today. Crude-oil futures have gained 4.7 percent in New York this year. The New York Mercantile Exchange is closed today for the Martin Luther King public holiday in the U.S.

Nigerian Violence

Nigerian oil production was reduced for a sixth day by violence in the Niger River delta region. Royal Dutch Shell Plc's joint venture evacuated staff from installations attacked by militants and the military sought to rescue kidnapped workers.

Armed militants attacked the Benisede pumping station yesterday, killing at least 14 soldiers, the Nigerian newspaper ThisDay reported. One worker was killed and 10 were injured, Shell said. An explosion Jan. 11 on the Trans Ramos pipeline had already halted output of 106,000 barrels a day, or about 4 percent of Nigeria's production.

``Nigeria's problems have escalated, with more incidents affecting crude-oil output,'' said Anette Einarsen, an oil analyst at Nordea Bank AB in Oslo. ``Nigeria produces mostly the light, sweet crude oil for which there is more demand. With Iran, my main concern is that we won't see a solution for a while and it will drag.''

The attacks in Nigeria also include the Jan. 11 kidnapping of four contract workers from the Shell-run offshore EA field and a Dec. 20 attack on another oil pipeline that cut exports from the Bonny terminal. The four foreign workers are still being held hostage, Shell said. The 115,000-barrel-a-day EA field resumed production Jan. 13, after a one-day shutdown.

Shell Evacuations

Shell said yesterday it had started evacuating people from Benisede and three neighboring flow stations, Opukushi, Ogbotobo and Tunu, because of the ``growing insecurity in the area.'' The Trans-Ramos pipeline attack means shipments from Nigeria's Forcados export terminal are being delayed three to four days.

Shell may evacuate all its staff in the Warri region in the west of the Niger Delta, which typically produces more than 380,000 barrels a day, Reuters reported today, citing a person it didn't identify. The Movement for the Emancipation of the Niger Delta sent an e-mail to Reuters saying it had 5,000 fighters and threatening to cripple Nigerian oil exports, the report said.

Nigeria, the sixth-ranked member of the Organization of Petroleum Exporting Countries by output, produced 2.45 million barrels of oil a day in December, according to a Bloomberg survey. The west African country was the fourth-largest supplier to the U.S. in October, delivering 1.09 million barrels a day, according to the Energy Department.

``The market is nervous ... worrying about the Nigerian news, with concern about Iran in the background,'' said Paul Goodhew, a broker at ABN Amro in London. ``I expect prices to remain firm toward the close.''

Iran Sanctions

Diplomats from the U.S., Britain, France, China, Russia and other European Union nations are meeting in London today to discuss calling an emergency meeting of the International Atomic Energy Agency, the UN's nuclear watchdog. U.K. Foreign Minister Jack Straw said Iran is failing to meet responsibilities to the world over its nuclear program.

``The main concern to Iran's reaction isn't the U.S., but that Israel could decide to bomb the nuclear plant,'' Einarsen said. ``Stability in the area depends on who's in charge in Israel.''

Israeli Prime Minister Ariel Sharon remains in ``serious and stable'' condition after a massive brain hemorrhage and a surgery on Jan. 4.

UN Sanctions against Iran, the second-largest producer in OPEC, could limit investment needed to pump more oil. Military action could curb or halt exports.

Lack of Capacity

Iran pumps almost 5 percent of the world's oil, or 3.9 million barrels a day. That's more than Saudi Arabia, the country with the largest extra capacity, could compensate for. Spare capacity to cope with supply disruptions has dwindled as global demand for crude surged in the past two years.

OPEC meets in Vienna on Jan. 31 to set production quotas during the second quarter, when oil demand typically declines as temperatures rise in the Northern Hemisphere.

Norway's largest oil company, Statoil ASA, said its Norne oil field will resume full production today after cuts last week. Norne had estimated production of about 100,000 barrels a day last year, according to the Norway Ministry of Petroleum and Energy's 2005 Facts book.

Statoil said Jan. 11 that Norne reduced output by 50 percent because of a storm in the surrounding Norwegian Sea. On Jan. 12, Norne's production was cut to about 25,000 barrels. The company yesterday interrupted output of 45,000 barrels a day of condensates and 27.5 million cubic meters of gas a day at the Asgard B field after a fire, the second one in three months.

Other Disruptions

``There are lots of disruptions to crude supply right now,'' Calyon's Wittner said. ``There are some losses of production in Norway due to winter storms and in Australia and Iraq'' because of bad weather.

For two days last week, rough seas in the Persian Gulf kept tankers from docking at Iraq's Basra oil terminal, the country's largest.

``The speculative money is as much of a key driver for oil prices as Iran and Nigeria,'' Wittner said. ``There has been a massive influx of new money into commodities in general since the start of the year.''

Seeking higher returns than in equities or bonds, 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 almost dwindled that week, totaling 722, down from 14,403 a week earlier. Bets for falling prices were as high 56,168 in November.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net

Last Updated: January 16, 2006 09:02 EST