Oil Prices Push Towards 33.50 Dollars a Barrel on Iraq, Nigeria Worries

Published November 27th, 2000 - 02:00 GMT

Oil prices jumped towards 33.50 dollars a barrel on Monday as traders worried about cold weather, a Nigerian strike and, most of all, an Iraqi threat to withhold oil from the thirsty market. 

A barrel of benchmark Brent North Sea crude for January delivery welled up to 33.43 dollars from 33.12 dollars at the close on Friday. In New York meanwhile, the January light sweet crude contract was seven cents up on Wednesday's closing value, at 35.47 dollars. 

"The main supportive feature is what is going to happen with Iraqi exports," said GNI market watcher Lawrence Eagles, referring to a protracted dispute between Iraq and the United Nations over Iraqi oil revenues. 

A second threat to supply meanwhile emerged in the world's sixth largest oil exporter, Nigeria, where oil workers launched a pay strike.  

Chilly northern hemisphere weather, particularly in the United States, meanwhile provided a further boost to prices, which have remained well above 30 dollars a barrel for all but a few days since early August. 

Iraq has threatened to halt its pumps if the United Nations blocks its demand for an extra payment of 50 cents a barrel into an account outside of UN control. 

It has also thrown another spanner in the works by requesting that the UN sanctions committee extend the current phase of the oil-for-food program until January 15. 

And on Saturday, Iraqi President Saddam Hussein said he would ask the United Nations to set aside part of Iraq's oil revenues for the Palestinians. 

Dresdner Kleinwort Benson analyst Medhi Varzi said traders were plagued by "some uncertainties in the market about what their (Iraq's) intentions are." 

Nervousness increased on Monday after the Middle East Economic Survey (MEES) warned that it expected Baghdad to suspend exports in the coming days over the spat. 

"MEES soundings indicate that until this problem is resolved, a disruption of Iraqi oil exports can be expected," it said. 

An oil embargo by Iraq, which pumps 2.3 million barrels of oil a day, could quickly drain fragile stocks, analysts warn, although Saudi Arabia has pledged to plug any gaps in the pipeline caused by political factors or natural disasters. 

Stocks would also be stretched if the Nigerian strike develops into a threat to its own exports of two million barrels per day. 

The Nigerian problems are "obviously supportive (to prices) although they have been in the background for a while," said Eagles. 

Against this backdrop, forecasts of a rise in temperatures in parts of the United States after a cold snap have had little effect on prices. 

"It has been a very cold Thanksgiving in the US North East," said Eagles, adding that this "will increase heating oil demand which is one of the main reasons that prices are high at the moment." -- LONDON (AFP) 

© 2000 Al Bawaba (www.albawaba.com)

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