Middle-east Arab News Opinion | Asharq Al-awsat

Oil Prices Jump After Nigeria Violence | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page

LONDON, AP – Crude oil prices climbed by more than $1.50 a barrel Tuesday after militant attacks on oil pipelines in Nigeria renewed fears of further supply disruptions.

By afternoon in Europe, light sweet crude for March delivery gained $1.55 to $61.43 a barrel in New York Mercantile Exchange electronic trading. The Nymex had been closed Monday for the U.S. Presidents Day holiday.

April Brent crude futures, which had risen more than $1.50 a day earlier, gave up some of those gains, falling 3 cents to $61.51 a barrel on London’s ICE Futures exchange.

Nymex heating oil rose more than 3 cents to $1.69 a gallon (3.8 liters), while gasoline advanced more than 2 cents to $1.528 a gallon. Natural gas jumped more than 20 cents to $7.39 per 1,000 cubic feet.

The sharp increase in the Nymex prices may be “the U.S. playing catch up” from Monday, said Orrin Middleton, energy analyst for Barclays Capital. But he added that the market will remain susceptible major news events over the course of the year.

Nigeria is Africa’s leading oil exporter and the United States’ fifth-largest supplier, usually exporting 2.5 million barrels daily.

The militants, who are pressing for the release of two of the region’s leaders from prison and greater control of oil revenues, have threatened to fire rockets at any ships transporting crude oil from Nigeria.

Militants attacked a Royal Dutch Shell Plc-operated pipeline switching station on Monday and a boat they claimed housed Nigerian military personnel, vowing to spread their campaign across the south — the area from which most of the country’s crude is pumped.

That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day — about one-fifth of daily output.

The violence Monday didn’t cause further production cuts, but sent prices higher. Shell said Tuesday it was extending its force majeure that protects the company from meeting its contractual obligation on Nigerian oil exports.

Militants also took nine foreign oil workers hostage Saturday, and on Tuesday called for independent negotiators to mediate between the hostage-takers and a Nigerian federal government they deem illegitimate. The group said negotiations have yet to be made.

The fact that light, sweet Nigerian crude is in high demand, especially in the U.S., makes the latest supply disruptions all the more important, said Sucden Commodity brokers. “For our part we continue to question how close the situation now is to either complete company withdrawal from the area or a strike by workers due to the obvious lack of security.”

Insurgent violence in Iraq also has increased over the past few days, with sabotage to northern Iraqi oil installations halting exports of 400,000 barrels a day. The country produces about 2 million barrels a day, down by about 800,000 barrels from before the U.S.-led invasion.