Jan. 17 (Bloomberg) -- Oil rose in New York after rebel attacks cut output in Nigeria and Western nations stepped up pressure on Iran to abandon its nuclear program. The exporters make up 7.5 percent of global oil supply.

Pipeline sabotage has cut output in Nigeria, Africa's biggest oil producer, by 4 percent in the past six days. The U.S. and U.K. are among nations that may seek to have Iran's refusal to stop nuclear research brought before the United Nations Security Council, a step that might lead to sanctions against OPEC's second-largest producer.

``Concern about supply means the risk premium in prices is on the rise,'' said Dariusz Kowalczyk, senior investment strategist at CFC Seymour Ltd. in Hong Kong. ``Iran is the major problem, but Nigeria coming on top makes matters worse.''

Crude oil for February delivery rose as much as $1.03, or 1.6 percent, to $64.95 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $64.80 at 12:19 p.m. in Singapore. Prices, which reached a record $70.85 on Aug. 30, are 34 percent higher than a year ago.

February crude fell 2 cents to $63.92 a barrel on Jan. 13. The exchange was closed yesterday for the Martin Luther King public holiday in the U.S.

``There just isn't the spare capacity'' to cover production threats like these, said Andrew Harrington, industry analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``Everybody is pumping about as much as they can.''

This is relevant because the price of oil is increasing and its a very big economic problem for the world and SINGAPORE because we will have to pay more cash for oil. The demand for oil will always remain constant because it is a necessity to operate machines and vehicles. From the article, output of oil from Nigeria has decreased by 4%, thus this implies that the supply curve would shift left, increasing the equilibrium price. This means that prices all over the world will increase, therefore less consumer surplus.

what do u think?

- nerissa & stephanie -