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oil to remain high??

  1. munch

    3,567 posts.
    Well with Iraq fast becoming a puppet state of America the oil supplies from there should easily provide enough oil for the world leading to lower oil prices.

    In the short term, we could see prices average over $28 this year.

    Stocks to benefit most include OSH and NVS

    Conflict in Nigeria fuels oil supply fears
    By Somini Sengupta
    March 24 2003

    Unrest ... members of the Ijaw ethnic group fled from Warri in the oil-rich Niger Delta as oil majors declared force majeure on Friday. Photo: AFP



    Though oil prices fell to a three-month low on Friday as US-led forces advanced into Iraq, a new threat to supplies is building in West Africa: ethnic conflict has begun to limit oil shipments from Nigeria and could complicate US refiners' efforts to produce more petrol for the Northern Hemisphere spring and summer.

    Royal Dutch-Shell, the largest oil producer in Nigeria, invoked force majeure on Friday, effectively warning customers that events outside the company's control could delay oil deliveries by up to two weeks from its Bonny and Forcados terminals.

    ChevronTexaco made a similar announcement on Thursday, though the group did not specify the potential duration of the delays from its Escravos terminal.

    In making the announcements, officials with both companies sought to play down the effect of the violence in the oil-rich, but volatile, Niger Delta, emphasising that production continued in other parts of the area. However, both companies have evacuated their employees from the delta.

    Simon Buerk, a Shell spokesman in London, said that the company had reduced production by 176,000 barrels of oil a day because of the clashes in the delta. Normally, Shell pumps an average of about 800,000 barrels a day from Nigeria.

    ChevronTexaco, whose average production hovers around 460,000 to 470,000 barrels a day, has lost about 140,000 barrels a day, according to Sola Omole, a company spokesman in Lagos.

    While civil strife frequently disrupts exports from Nigeria, some oil analysts warned that with so many problems bedevilling world oil markets, a prolonged reduction in Nigerian oil shipments could send prices higher once again.

    "This has been building for months but it has been tremendously overshadowed by events in Venezuela, then Iraq and the cold winter we've had," said John Kilduff, senior vice-president of energy risk management at the New York office of Fimat USA, a unit of the French bank Societe Generale.

    "Nigeria is a key source of supply and, in this kind of situation, we need every barrel."

    Lately, oil markets have focused almost exclusively on Iraq, with prices falling as American and British forces advanced with little resistance. The price of oil for May delivery fell $US1.21, or 4.3 per cent, to $US26.91 a barrel at the end of trading on Friday on the New York Mercantile Exchange. The near-month oil contract had not closed that low since December 4 last year.

    In December tensions in Venezuela sparked a nationwide strike that brought oil exports to a halt. The concern among analysts is that events in Nigeria could similarly blindside traders.

    The ostensible cause of the violence in the Niger Delta is the way political representation has been apportioned in advance of Nigeria's April 19 elections, when the country is attempting its first peaceful transition from one civilian government to another since independence in 1960.

    The fighting, which began on March 12, pits two of the largest ethnic groups, the Ijaw and the Urhobo, against the Government of President Olusegun Obasanjo, whom they accuse of favouring minority Itsekiris in the design of the election.

    The violence has continued unabated between armed militias from those ethnic groups and the Nigerian military, killing at least 10 soldiers and an untold number of villagers from the region. The Ijaw have long complained about political representation and limited access to the oil riches of the delta. This week, they threatened to disrupt oil facilities if the Nigerian military fired on them.

    With elections approaching, bringing fears of escalating political violence, hundreds of civilians have fled the delta in recent days, some crowding into oil terminals in hopes of being airlifted by oil company helicopters.

    Members of the Itsekiri tribe filled a ChevronTexaco terminal earlier this week after their villages were attacked. Helicopters hired by the multinationals to evacuate their own workers were also used to ferry villagers to the southern port city of Warri. Local leaders reported that a dozen villages had been raided. Officials at the Nigerian army command centre in Warri refused to comment on Friday night.

    Nigerian crude oil is a coveted light sweet oil that yields more gasoline and diesel than sour grades of crude. While a great deal of oil is on its way to the US from the Middle East, it is nearly all sour crude.

    "I think the loss of volume is interesting but it's the quality of the crude that is more important," said Lawrence Goldstein, president of the Petroleum Industry Research Foundation in New York.

    Refiners on the east coast of the US are significant importers of Nigerian crude oil, said Aaron Brady, senior oil analyst with Energy Security Analysis. Moreover, European countries import a lot of Nigerian crude to turn into diesel fuel, sending the excess petrol to the US, he said.

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