Iraqi, Nigerian oil export loss to hit US market

Reuters, 03.25.03, 2:51 PM ET By Timothy Gardner NEW YORK (Reuters) - Iraq's official oil exports slid 75 percent to 443,000 barrels per day (bpd) in the week ended March 21, after the United Nations effectively shut the country's main oil port by removing personnel ahead of the U.S.-led attack on Iraq, U.N. officials said Tuesday. That was down from the previous week in which official exports were 1.8 million bpd. The loss comes as U.S. stocks are hovering just above minimum operating levels and as a military-tribal clash has slashed exports from Nigeria, a leading U.S. supplier of high quality crude. U.N. Secretary-General Kofi Annan on March 17 ordered the evacuation of all U.N. personnel in Iraq, including "oil for food" program personnel. That has effectively shut shipments from Mina al-Bakr, which normally handles about two-thirds of Iraq's official oil exports. A reduced amount of oil is still flowing via pipeline from northern Iraq to the Turkish Mediterranean port of Ceyhan where tankers can still legally pick up crude. On Tuesday oil flow on the line was 179,000 barrels, down from an average of about 700,000 barrels in February. But few oil companies have been willing to risk buying Iraq's crude in wartime. There were two loadings from Mina al-Bakr and two from Ceyhan in the week. The tanker Caithness completed loading last week at Ceyhan, U.N. officials said. There are no other vessels currently expected at Ceyhan. Storage tanks at the terminal are near capacity. The slide in shipments pushed the four-week rolling average of oil exports down to 1.38 million bpd, compared to 1.7 million bpd last week, which was the average rate for 2002. The average price for Iraqi crude fell to $22.00 per barrel, down $5.60 from the previous week. These figures do not include oil smuggled out of Iraq to Syria, Turkey, Iran or other points.

SAUDI STRENGTHENED Though a crimp in Iraqi exports was expected, it comes when the United States, the world's largest consumer of oil, begins to boost gasoline making to gear up for summer holiday driving season. And clashes ahead of elections in Nigeria between the Ijaw ethnic group and the military has removed 817,000 barrels per day (bpd) there. Combined, the two slowdowns total 2.1 million bpd loss from the 76 million bpd global oil market. U.S. spare crude supplies were 272 million barrels the federal government reported last week, just above the 270 million barrel level industry says is the minimum operating level for U.S. refineries to run smoothly. "As always we have to be concerned about a compound risk," said Tim Evans, senior market analyst at IFR-Pegasus in New York. Top Organization of Petroleum Exporting Countries producer Saudi Arabia has booked 14 tankers to move 29.5 million barrels of crude to the U.S. Gulf for delivery in May to make up for losses from Iraq and Venezuela, where oil production is recovering from a two-month strike. Saudi is one of the few world exporters with spare oil producing capacity. If the Nigerian situation drags on it would remove worries of an oil surplus in the second quarter and strengthen Saudi Arabia's command of the global oil market, said Evans.