Oil up 1% as Iran official says country will keep enriched nuclear material

Detailed summary

GLOBAL-OIL:Oil up 1% as Iran official says country will keep enriched nuclear material

NEW YORK, Nov 11 (Reuters) - Oil prices rose about 1% on Wednesday after the Iranian security chief said Iran would not allow any enriched nuclear material to leave the country, feeding supply worries that lifted prices off two-month lows hit the previous session.

The United States has said nuclear issues must be part of any initial negotiations with Iran aimed at ending their war.

Brent futures settled $1.27, or 1.39%, higher at $92.76, while US West Texas Intermediate crude gained 49 cents, or 0.57%, to $86.53.

In the previous session, oil prices initially fell by more than $3 a barrel after US officials played down the need for further military strikes against Iran. Prices later pared some losses after an Iranian security official said no talks were taking place between the two sides.

"Oil prices are being supported by fading hopes of an imminent de-escalation," UBS analyst Giovanni Staunovo said.

While OPEC crude oil production jumped in October, led by a sharp increase in output from Saudi Arabia, there is little sign of easing disruption in the Strait of Hormuz. Data from the Washington Institute for Near East Policy showed that 37 ships were attacked in October, the highest monthly total since the start of the war in February.

"This demonstrates that operational risks have not disappeared simply because diplomatic signals have turned more positive," said Simon-Peter Massabni, head of business development at XS.com. "More importantly, even if a political agreement is reached, shipping activity is unlikely to return to normal immediately."

Brent and WTI prices have fallen about 21% and 17%, respectively, since the start of the month on hopes of an end to the war.

Iranian forces have attacked ship navigation systems on the Omani island of Didamar in the Strait of Hormuz, demonstrating Iran's ability to target infrastructure used to restore Gulf oil flows.

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