The Times: North Sea oil soars to record as shortages fear grows: “Strikes in Nigeria and Norway also conspired to push the price of Brent in London trading to $50.62 a barrel, up 91 cents on the day.”: “Separately, the world’s biggest oil companies, including ExxonMobil and Total, were yesterday thrown by a surprise decision by Venezuela’s Government to raise oil exploitation taxes by 1,500 per cent.” (ShellNews.net)
By Peter Klinger and Gary Duncan
October 12, 2004
NORTH Sea oil burst through $50 a barrel yesterday, charging to a record level as the International Monetary Fund sounded warnings that high prices are set to persist.
Fears that oil prices — now 65 per cent higher than at the beginning of the year — could remain at present levels for months were fuelled as analysts raised the spectre of winter fuel shortages.
Strikes in Nigeria and Norway also conspired to push the price of Brent in London trading to $50.62 a barrel, up 91 cents on the day. Unions in Nigeria, the world’s seventh biggest oil producer and Africa’s biggest, began a four-day general strike and Norwegian oil rig workers plan to cut an additional 25,000 barrels of production from today as part of a long-running strike.
In New York US light crude hit its own new high of $53.69.
The latest jump in prices stoked concerns that persistently high crude costs would derail the global economic recovery.
Worries over the inflationary impact were underlined in the UK as the cost of manufacturers’ raw materials and fuel rose at the fastest annual pace for almost four years.
A scramble by industry to try to bolster its margins in the face of this pressure meant that the cost of goods leaving factories also jumped, climbing in September at the fastest rate for more than eight years.
A senior official of the International Monetary Fund again acknowledged that it now expects high oil prices to persist for longer than previously hoped. “Everybody’s oil price assumptions are being ratcheted upwards,” said Michael Deppler, director of the IMF’s European Department. “All of this is making people realise that the oil price rise is going to be more sustained, even though they think in the medium-term (it) will come down.”
Analysts backed the IMF’s judgment. Kevin Norrish, oil strategist at Barclays Capital, said: “The way we see things, the risk is still very much on the upside. Going into the fourth quarter there’s a lot of risk on production for gasoline oil and for heating oil, we are looking at pretty low inventory levels and the market is going to be very aware of the cold winter.”
However, Ali Al-Naimi, the Saudi Oil Minister, said at the weekend that the soaring oil price levels should ease after next month’s US presidential election. He said: “There is no justification for it to be where it is. This is a political year and this may have some influence.”
Supplies are also hampered by the aftermath of Hurricane Ivan, which hit producers in the Gulf of Mexico nearly a month ago. About 475,000 barrels of production remain out of commission.
Separately, the world’s biggest oil companies, including ExxonMobil and Total, were yesterday thrown by a surprise decision by Venezuela’s Government to raise oil exploitation taxes by 1,500 per cent.
The new tax regime, which takes immediate effect, means that foreign operators in the massive Orinoco oil belt will have to hand over up to 16.6 per cent of revenue per barrel, compared with zero to 1 per cent previously.
SWEET AND SOUR
Crude oil varies in value and use by whether it is light or weighed down with tar and whether it is sweet or soured by a high sulphur content
Light sweet crude, such as oil from Texas, the North Sea, Nigeria and Indonesia, is easy to refine and yields a high proportion of valuable petroleum
Three fifths of world output is sour, including the medium sour from Saudi Arabia, Iraq and Iran and also from Russia. It costs more to refine and remove the sulphur that causes pollution
Heavy sour crude, such as most of the output of Venezuela and Mexico, is good for road coverings or power stations but yields less light oil or petrol