By Richard Valdmanis
NEW YORK (Reuters) - Oil prices rose 3 percent to a seven-week high on Tuesday on worries over supply disruptions from Nigeria as the government moved to stem militant attacks on the OPEC member's pipelines and export terminals.
Violence has already forced the closure of about 26 percent of production from the world's eighth largest exporter, or about 630,000 barrels per day (bpd).
A spokesman for Royal Dutch Shell (RDSa.AS: Quote, Profile, Research), the biggest oil operator in Nigeria and the company most affected by the violence, declined to say when production would resume.
Nigeria's president called for a meeting on April 5 with groups from the oil producing Niger Delta after militants released three oil company hostages on Monday.
Dealers were also watching a workers strike in France that lightly reduced operations at some refineries, ramping up fuel supply worries ahead of the summer driving season.
U.S. light crude
"The market is reacting to new threats out of Nigeria and some strike rumours in Europe," said Phil Flynn of Alaron Trading in Chicago. "But for this time of the year, this is nothing new. As we approach the summer driving season we tend to play out the worst case scenarios in our heads."
Prices have been locked over $60 for more than a month as investors balance geopolitical risks in Nigeria and Iran -- embroiled in a dispute with the West over its nuclear program -- with bumper U.S. fuel supplies.
Foreign ministers from the United States, Russia, China, Britain, France and Germany are due to meet on Thursday to try to break the deadlock on how best to deal with Tehran.
Analysts expect U.S. crude stocks to have risen further last week, predicting an 800,000-barrel gain in government data due on Wednesday. Analysts expect distillate and gasoline stocks to have each dropped more than 1 million barrels .
Adding to worries, the U.S. oil industry is phasing out gasoline additive MTBE in favour of ethanol and is cutting back sulfur content in diesel, moves that energy experts have said could boost prices despite high commercial inventories. Continued ...
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