Daily Telegraph (UK): Shell raids likely to drive up oil prices: “Nigerian rebels yesterday seized three oil platforms operated by Shell and Chevron Texaco, shutting down production of 90,000 barrels of oil a day, the company said.” (ShellNews.net) 6 Dec 04
By Malcolm Moore, Economics Correspondent (Filed: 06/12/2004)
Nigerian rebels yesterday seized three oil platforms operated by Shell and Chevron Texaco, shutting down production of 90,000 barrels of oil a day, the company said.
Price pressure: Qatari energy minister Abdullah Al-Attiyah says 'huge over-production' is pushing prices down. His country will push for a cut in supply
A spokesman for Shell said that the rebels, around 200 youths from the Kula community, have not yet made any demands. The news is likely to send the price of oil, which dropped 15pc last week, back above $40 in London.
Nigerian oil is particularly prized by the US market for its low sulphur content, which makes it easier and cheaper to refine into petrol.
Rises are also expected after members of Opec suggested that the oil cartel was poised to cut production this week in a bid to drive up prices and boost its members' revenues. Kuwait became the latest Opec member to call for a cut in supply. "If this slide will continue, as has happened in the past 48 hours, I think we will have to cut all over-production," said Sheikh Ahmed al-Fahd al-Sabah, the Kuwaiti energy minister.
Iran, Venezuela and Qatar have all said they will lobby to turn off the pumps. "Huge over-production" is helping to fill US oil stockpiles, and push prices down, said Abdullah Al-Attiyah, the Qatari energy minister. "Opec members should go back to quota levels," added Iran's Opec representative.
Opec has been pumping about 2m barrels a day above its quota of 27m barrels a day to ease the recent supply crisis in the market. Opec has called an extraordinary meeting in Cairo on Friday to debate the situation. The price of front-month Brent crude oil plunged to $39.36 a barrel in London on Friday. The price of light sweet crude in New York was $42.54.
The falling oil price has been exacerbated by the weakness of the dollar, which has fallen by close to 5pc in the last month. However, the fall in oil prices has yet to translate into a fall in the price of petrol in the UK. Calculations by Petroleum Intelligence Weekly show that, in simple purchasing power terms, the fall in the dollar means Opec should "substantially hike" its target price for oil from $22 to $28 a barrel to $28 to $35.
Another headache for the cartel is that the Opec basket has only risen half as much in price as light sweet crude and North Sea Brent. This is because Opec members typically produce heavy sour crude.
The chances of oil majors boosting their presence in the Middle East improved when the head of the Kuwaiti state oil company called for help in maximising the country's oil flow. Hani Hussein said: "We have a massive investment programme.
"We plan to spend between $30billion and $40billion in the next 15 years.''