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Articles: Supply fears push up oil prices

Posted by admin on Tuesday, July 06, 2004 - 01:33 AM

Oil prices are rising after renewed sabotage of Iraqi oil exports and fears of disrupted production elsewhere.
US crude oil leapt more than 80 cents in Asian trade to break back through the $39 a barrel barrier after several weeks of slackening prices. A key pipeline in Iraq was sabotaged at the weekend, halving exports. Meanwhile, traders are nervously eyeing problems in both Nigeria and Russia, two of the most important oil exporters outside the Middle East. Opec promise In Russia, Yukos - which accounts for one in every five barrels of oil Russia produces - is on the brink of bankruptcy and has already defaulted on a $1bn loan from Western banks. The oil firm is facing a tax bill of almost $7bn in arrears, with the deadline for the first installment set for Wednesday. The company tried to soothe the markets on Monday by saying it had no plans to cut exports this month, but traders fear for the worse. Dealers are also worried about Nigeria, where white-collar oil union Pengassan is threatening strike action unless ExxonMobil - Nigeria's second largest producer - meets its pay demands. Last month, the oil producers' cartel, Opec, tried to cool the market by promising to raise production from the start of August. But the recent spate of supply disruptions is balancing out the impact of the promised action. "The longer Iraqi exports stay affected, the closer we may creep to $40 a barrel, especially if there's any other bad news on the supply side," said David Thurtell from the Commonwealth bank of Australia. London's Brent crude was also on the rise, gaining 35 cents to $36.65 a barrel in Asian trade.

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