Monday, July 28, 2008

Oil Prices Rise as Pipelines Attacked in Nigeria

Oil prices rise as pipelines attacked in Nigeria

28 Jul 2008|07:57 AM ET
LONDON (Thomson Financial)

Oil prices rose on Monday after rebels said they had sabotaged two pipelines in Nigeria, a major exporter of crude, and analysts said that the market was also tracking developments over Iran.

Brent North Sea crude for September delivery climbed $1.58 to $$126.10 a barrel.

New York's main contract, light sweet crude for September, advanced by $1.50 to $124.76 a barrel.

"Crude futures were higher amid geopolitical concerns over Iran and Nigeria," said Sucden analyst Nimit Khamar.

The Movement for the Emancipation of the Niger Delta claimed on Monday that it had sabotaged two Shell pipelines in Rivers state in southern Nigeria overnight.

In an email, it said "heavily armed" MEND fighters had attacked the pipelines at Kula and Rumuekpe operated by Shell Petroleum Development at 1:15 a.m. (0015 GMT).

Contacted by AFP, two Shell spokesmen said the claim -- and the extent of any damages -- were being verified.

Word of the sabotage came after the release on Saturday of eight foreign workers who had been kidnapped near a major oil export terminal in southern Nigeria with no ransom being paid.

The oil-rich Niger Delta has seen numerous kidnappings targeting foreign energy firms, claimed by militants demanding a greater share of oil wealth for the region's inhabitants.

Violence in the southern region has reduced Nigeria's total oil production by a quarter since January 2006.

Nigeria was Africa's biggest oil producer until it was overtaken in April by Angola, according to Organization of Petroleum Exporting Countries (OPEC) figures.

Meanwhile in Iran, President Mahmoud Ahmadinejad said on Saturday that the oil-producing country had boosted the number of uranium-enriching centrifuges to up to 6,000, in an expansion of its nuclear drive that defies international calls for a freeze.

Iran denies seeking nuclear weapons, insisting that its programme is designed to provide future energy for its growing population.

"These events (in Iran and Nigeria) just goes to remind the market participants that geopolitical risks still remain and have a potential to disrupt oil supply," added Khamar at the Sucden brokerage in London.

However, the price of oil could drop to between $70 and $80 a barrel if the dollar strengthens and concerns over Iran are reduced, OPEC chief Chakib Khelil said on Saturday.

A strong U.S. currency weighs on demand for dollar-priced goods because they become more expensive for buyers holding weaker currencies.

Oil prices struck record highs above $147 a barrel on July 11 as the U.S. unit weakened and owing to tensions over Iran. They have since fallen more than $20 on concerns that the global economic slowdown will weigh on energy demand, particularly in the United States -- the world's biggest consumer of oil.

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