Oil prices fall as Nigeria swears in new president

NEW YORK - Oil prices plunged $2.05 a barrel on hopes that the inauguration of a new president in Nigeria yesterday would contribute to a stable supply from the Niger Delta region.

Also, a formal meeting Monday between U.S. and Iranian officials soothed traders' concerns about a potential conflict between the two countries.

Light, sweet crude for July delivery dropped to $63.15 a barrel yesterday on the New York Mercantile Exchange.

"It's certainly a big drop, a material drop in price," said Tim Evans, an energy analyst at Citigroup Global Markets. "Basically, the new president is calling for Nigerian unity. He's waving the olive branch, and it makes us feel more secure regarding Nigerian oil supplies."

Umaru Yar'Adua, 56, replaced Olusegun Obasanjo, who stepped down after eight years. In his inaugural address, Yar'Adua called for an immediate end to hostilities in the country's southern oil region.

Also, Nigerian labor union officials ordered oil workers back to work Saturday after the government agreed to a 15 percent raise for all employees of the Nigerian National Petroleum Co. Unions began a strike Thursday and threatened to target exports in hopes of reversing the sale of government refineries.

The formal meeting of U.S. and Iranian officials was the first between the countries in 27 years.

Tension between the West and Iran has increased this year as Iran has expanded its uranium enrichment program. Traders and analysts fear any conflict between the U.S. and Iran could result in the closure of the Strait of Hormuz, through which tankers carry about 17 million barrels of crude oil a day, according to the U.S. Energy Information Administration.