Nigerian attacks send prices higher
Saudi output vow disappoints some
NEW YORK - Crude oil prices rose on signs that Saudi Arabia's increase in output may not make up for disruptions in Nigeria.
Attacks last week on a Royal Dutch Shell PLC platform and a Chevron Corp. pipeline halted 300,000 barrels a day of Nigerian output, and the country's white-collar oil union began a strike against Chevron yesterday. Meanwhile, Saudi Arabia, following through on earlier indications, pledged Sunday to pump an extra 200,000 barrels a day next month.
"There were some hopes for a more substantial increase" from Saudi Arabia, said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. At the same time, "the attack on the offshore platform and the Chevron pipeline point to an escalation," he said.
Prices touched a record $139.89 on June 16 and have doubled in the past year.
Saudi Arabia first pledged to raise output 200,000 barrels a day after King Abdullah met with UN Secretary-General Ban Ki-Moon on June 15.
"There would have had to be an increase of 1 million barrels to have a major impact," said Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Mass.
Saudi Arabia will offer more oil if there is demand and also plans to increase its production capacity to 12.5 million barrels a day by the end of next year, Oil Minister Ali al-Naimi said Sunday at a summit of oil producing and consuming nations in Jeddah. Capacity may eventually rise to 15 million if necessary, using oil from five "mega" fields that could potentially start up within three years, he said.
Rebels in the Niger Delta, which supplies all of Nigeria's crude, have sabotaged infrastructure to press their demand for a greater share of oil wealth and more political power. The country, Africa's second-biggest oil producer after Angola, generates low-sulfur, or sweet, oils prized by refiners because of the high proportion of gasoline and distillate fuels it yields.
The Thursday attack on Shell's Bonga offshore platform, which produces about 190,000 barrels a day, may halt deliveries for as long as six weeks, the company said last week. Chevron halted 120,000 barrels a day of onshore production after its pipeline was blown up last week.
Supply concerns may ease as militants end their attacks against foreign oil companies. The Movement for the Emancipation of the Niger Delta said Sunday it would declare a cease-fire at midnight local time today to "give peace and dialogue another chance."
"If the truce comes true it will be very big news," said Lynch. "It would be very bearish for the markets because a great deal of high-quality, distillate-rich, crude would be made available."
Brent crude oil for August settlement rose $1.05, or 0.8 percent, to settle at $135.91 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.
