Iraq and Nigeria push oil prices up
Oil prices neared a five-month high on Tuesday, following continued violence in OPEC exporting member countries Iraq and Nigeria.
October Brent crude in London was selling for $28.87 a barrel at midday GMT, creeping closer to the $30 boundary crossed during Iraq’s invasion and general strikes in Venezula and Nigeria last March.
Light crude on the New York Mercantile Exchange has risen even higher, reaching $31.08 a barrel.
Iraqi officials and oil market analysts believe US hopes of restoring two-thirds of pre-war capacity by the end of the year will be impossible while fierce resistance to occupation continues.
Low capacity
Under an investment plan approved last month, Baghdad had hoped to export 1.5 million barrels per day by the end of the year – less than the pre-war capacity that was regularly above two million.
But exports are currently less than 500,000 barrels a day.
“Iraq remains an uncertain exporter of oil and Saudi Arabia has done nothing to compensate for the failure of its northern neighbour to raise exports as expected,” said London-based consultants of the Centre for Global Energy Studies in a report.
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“Saudi Arabia has done nothing to compensate for the failure of its northern neighbour to raise exports” Consultant’s report |
World prices have risen since two fires on the Iraq-Turkey pipeline closed Baghdad’s main northern export route last Saturday, just before the link was set to start shipping big volumes to world markets after a five-month closure.
Nigeria
Ethnic violence in the southern Nigerian oil city of Warri has also kept supply concerns raised.
Royal Dutch/Shell and ChevronTexaco said the clashes had not affected production, but dealers suspect that shipments from the world’s seventh largest oil exporter will be disrupted.
The violence is the worst since March – when oil companies were forced to close down 40% of the OPEC nation’s oil production.
But increases in Nigerian petroleum prices, after last week’s blackout in the United States and Canada forced seven refineries to shut down, have now dissipated.
US government data on oil inventories to be released on Wednesday is expected to show a 1.6 million barrel rise in crude supplies and a million barrel fall in both distillates and gasoline stocks, following the loss of refinery production during the power failure.