[Peakoil] Nigeria and Iran push oil price higher

[Jenny Goldie]

Oil prices hit four-month highs
From: Agence France-Presse 
by Antoine Agasse

January 20, 2006 

WORLD oil prices jumped to four-month highs overnight as simmering tensions in Nigeria and Iran overshadowed news of rising US energy stockpiles, dealers said.

New York's main contract, light sweet crude for delivery in February, rose $US1.10 to close at $US66.83 a barrel, its highest finish since September 19. 

In London, the price of Brent North Sea crude for March delivery advanced $US1.04 to finish at $US65.23 a barrel. 

Prices went up despite "bearish" inventory numbers from the US Department of Energy (DoE), AG Edwards analyst Bill O'Grady said. 

"I think what the oil market is telling us is that they are very concerned about problems in Nigeria, problems in Iran," he said. 

 

In Nigeria, Africa's biggest crude producer, the oil industry was braced for more attacks on its facilities after a separatist group which claims responsibility for kidnapping four foreign workers threatened further violence. 
Oil industry security experts said they feared separatist militants - having blown up several pipelines, kidnapped oilmen and killed at least five government soldiers with apparent impunity - would strike again. 

Anglo-Dutch energy giant Shell, Nigeria's biggest producer and so far the main target of the attacks, has been forced to cut output by 226,000 barrels per day (bpd) since the crisis began over a week ago. 

Oil analysts say cutbacks in Nigeria will hurt the market badly because the country produces light sweet crude, which is particularly coveted by refineries. 

Traders were also monitoring the escalating crisis over Iran as Tehran warned the West that UN sanctions over its controversial nuclear programme could provoke a world oil crisis. 

"In case of sanctions, other countries will suffer as well as Iran," Oil Minister Davoud Danesh-Jafari said, according to the official news agency IRNA. 

"One of the consequences will be the unleashing of a crisis in the oil sector and particularly a price hike," he added. 

Iran, the second-biggest crude exporter in the Organisation of Petroleum Exporting Countries, exports an estimated 2.7 million bpd. 

The geopolitical tensions overshadowed the DoE's news that US energy stockpiles went up across the board in the week ended January 13, which would normally have depressed oil prices. 

Crude stocks rose 2.7 million barrels over the week to total 321.4 million barrels, the DoE said. 

That was 12-percent higher than year-ago levels and trounced market forecasts for a 100,000-barrel fall in US crude stocks. 

Supplies of distillate products, used to make heating fuel and diesel, rose 900,000 barrels to 134.7 million. Reserves of gasoline, or petrol, were up 2.8 million barrels at 211.6 million, the DoE said. 

"The weather is very mild in the US so the builds in stocks are not a huge surprise," said Investec analyst Bruce Evers. 

"Demand is growing, and we still have uncertainties in Nigeria, and the ongoing situation in Iran continues to worry," Evers added. "The sentiment is still very positive and the market in a very bullish mood." 

O'Grady at AG Edwards said the higher US inventory figures, in fact, reflected speculative buying sparked by fear of supply shortfalls in Iran and Nigeria. p>"I don't think we are close to seeing a disruption of supply in Iran, and actually these problems in Nigeria are pretty common," he said. 

"The issue is not imminent but what you are seeing is a desire by oil consumers to build inventories. 

"And that buying of stocks levels means that the build in inventories, although usually it would be considered bearish, doesn't have that much of an impact. Because really what it shows is greater demand." 
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