Oil higher in Asian trade on Nigeria unrest

January 13, 2012 7:14 am


Nigerians take to the streets on oil demonstration/FILE
SINGAPORE, Jan 13 – Oil prices moved higher in Asian trade Friday amid the threat of a production shutdown in Nigeria, Africa’s biggest crude producer.

New York’s main contract, West Texas Intermediate crude for delivery in February gained 44 cents to $99.54 in morning trade.

Brent North Sea crude for February was up four cents at $111.30

“Geopolitical supply side issues continue to be the key bullish factor affecting oil prices,” said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.

“Besides Iran, the more immediate concern that could affect supply are the strikes in Nigeria”

Nigerian oil workers vowed Thursday to start shutting down production this weekend as a national strike entered its fifth day.

High level talks between labour leaders and President Goodluck Johnathan made progress toward a deal but were not enough to call off the industrial action.

Both sides are scheduled to meet again on Saturday — with oil workers planning to shut down production at midnight of that day, if no resolution is reached.

The unrest in the country started Monday amid protests against the government’s January 1 scrapping of fuel subsidies, which caused petrol prices to more than double, sparking widespread anger.

Nigeria produces more than two million barrels per day and is a key supplier of crude to the United States and European Union.

Meanwhile, concerns over an immediate disruption in Iranian crude exports have eased on news that the threatened EU oil embargo on Tehran might not take effect for six months, analysts said.

“EU diplomats had said a consensus was emerging to grant a grace period before banning new deals with Iran — six months for crude oil purchases and three months for petrochemicals,” Phillip Futures said in a commentary.

The phased implementation of the embargo would make the break less painful for financially stressed European countries that depend on Iranian crude — Italy, Greece and Spain.

The EU is collectively the second-biggest destination for Iranian oil exports after China, taking in about 450,000 barrels per day.

Iran’s influential speaker of parliament Ali Larijani Thursday also said his country was ready for “serious” talks with world powers on its controversial nuclear programme.

Tehran has threatened to close the strategic Strait of Hormuz if the West goes ahead with further sanctions over allegations the country was developing a nuclear bomb.


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