Oil trades above $73 as Iran-Iraq tensions over disputed area ease

London: Oil held firm above $73 (Dh268) a barrel on Monday after a 1 per cent rise in the previous session as Iranian troops partly withdrew from a disputed oil area in Iraq, reducing tensions between two major crude exporters.

The more actively traded February contract rose towards $75 a barrel, helped by frigid weather in the US Northeast and Europe, but gains were limited during a holiday-shortened week and ahead of today's gathering of the Organisation of Petroleum Exporting Countries (Opec).

Crude for January delivery rose 43 cents to $73.79 a barrel by 1417 GMT, after settling up 73 cents on Friday. The February contract was at $74.95.

London Brent crude was up 54 cents at $74.29.

Iraqi government spokesman Ali Al Dabbagh said on Sunday a group of Iranian troops, who had taken over an oil well in a remote region along the Iran-Iraq border last week, were no longer in control of the well, which Iraq considers part of its Fakka oilfield.

"Weather and geo-politics are supporting oil even in the face of overwhelming supply and a glut of spare production capacity," PFGBest analyst Phil Flynn said.

Heavy snow and freezing temperatures in the US Northeast and Europe helped push prices higher.

Firm dollar

Oil has risen from a 2-1/2-month low of below $70 a barrel a week ago, after government data showed large declines in US crude and distillate inventories due in part to colder weather.

But gains have been capped by a firm dollar, which hovered near its highest in more than three months against the euro yesterday.

Strength in the greenback makes dollar-priced commodities more expensive for holders of other currencies.