Oil rises on pipeline fire in Turkey

NEW YORK (Reuters) - Oil rose on Thursday on expectations a one million barrel per day pipeline that was attacked by Kurdish separatists in Turkey could remain shut for up to two weeks.

The Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which pumps the more than 1 percent of world supply from fields in the Azeri sector of the Caspian Sea to the Turkish Mediterranean coast, was still ablaze after the Tuesday night explosion.

U.S. crude settled up $1.44 at $120.02, rebounding from three-month lows after concerns about faltering demand in the United States and Europe helped push oil off a July 11 record of $147.27.

London Brent crude settled 86 cents higher at

$117.86.

"The loss of supply from Azerbaijan only adds to a new layer of worry to a market that has found ways to operate with multiple layers of worry, already," said Peter Beutel, president of trading consultants Cameron Hanover.

Further support has come from ongoing supply disruptions from OPEC member Nigeria from militant attacks and escalating tension between Iran and the West over Tehran's nuclear program.

A top U.N. nuclear watchdog official began talks in Iran aimed at improving cooperation with the International Atomic Energy Agency over the program, which Iran insists is peaceful.

Diplomats in Vienna, where the IAEA is based, said the visit was a fresh effort to extract Iranian clarifications about intelligence reports suggesting it illicitly tried to design atomic bombs.  Continued...