Oil Prices Soar Amid War in Iraq, Unrest
Vanguard (Lagos) Posted to the web April 1, 2003 Hector Igbikiowubo, With Agency Report Lagos
CONTINUED stiff resistance faced by coalition forces in Iraq and fresh reports of bloody unrest in Nigeria pushed oil prices higher yesterday as traders betrayed concern. The price of reference Brent North Sea crude oil for May delivery rose 77 cents per barrel from the previous closing to 27.12 dollars in late trading. New York's benchmark light sweet crude contract for May delivery crept up 24 cents to 30.40 dollars a barrel in early deals. The rises came despite assurances from the White House that there was no need yet for the United States to tap its strategic petroleum reserve. "We have seen no evidence to date of a severe supply disruption, nevertheless the experts continue to monitor it," White House spokesman Ari Fleischer told reporters. Traders were trying to sift through the reams of war news to work out how the campaign in Iraq was really progressing, said GNI trader Robert Laughlin.
"The interest is very much... in terms of the propaganda machine over the weekend, as the Americans still said the war effort is being successful despite the fact there appears to be a mini-ceasefire," he said. Advances by US and British troops towards Baghdad appeared to slow over the weekend, with some experts warning that supply lines were becoming stretched. Yesterday, British commandos saw fierce fighting as they launched a major assault on the key southern city of Basra.
Meanwhile, continued ethnic unrest in Nigeria, which has reduced the country's oil exports by more than a third, was also fueling concern, analysts said. Police in the troubled Niger Delta said that scores of people were feared killed over the weekend in clashes over land rights near Port Harcourt, the Rivers State capital. "The market is up because people are still worried about the situation in Nigeria, where there was more violence over the weekend," said Deutsche Bank analyst Adam Sieminski. "It means that the 800,000 barrels a day of production that was lost last week is still out, in contrast to statements Thursday and Friday suggesting that a compromise between ethnic groups and the government had been reached," he added.
For the moment, there were few real concerns about supplies, but more bad news could send prices soaring, Sieminski said. "There is still enough oil coming from Saudi Arabia and even Venezuela to keep the market supplied, but with Iraq out and the conflict in Nigeria still continuing, the market is tightly balanced, and if anything else should go on, we would see higher prices," he said. However, Prudential Bache broker Tony Machacek said he considered it unlikely that prices would go much higher on the back on new supply problems in Iraq. "So far, a lot of the oil fields appear to have been militarily secured, so it is unlikely that (Iraqi leader) Saddam (Hussein) or his army will be able to disrupt supplies from Iraq very easily," he said.