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Crude oil jumps above 65 on iran nigeria supply Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aDyDhy_Vj0SY&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=aDyDhy_Vj0SY&refer=home
Crude Oil Jumps Above $65 on Threat to Iran and Nigeria Supply
Jan. 17 (Bloomberg) -- Crude oil surged to a three-month high, surpassing $65 a barrel in New York, on concern Iranian and Nigerian shipments may be disrupted.
The U.S., Britain and France want to bring Iran before the United Nations Security Council and take measures that may include sanctions. Iran said on Jan. 10 it would resume nuclear research. Nigerian militants threatened to attack oil companies, Sky News reported. The developments could hinder output in the countries, which produce 7.5 percent of the world's oil.
``The threats remind us of how tight the supply-demand balance is,'' said John Kilduff, vice-president of risk management at Fimat USA in New York. ``These threats can't be dealt with; there just isn't enough spare capacity, so prices are moving higher and will continue to do so.''
Crude oil for February delivery rose $1.43, or 2.2 percent, to $65.35 a barrel at 12:56 p.m. on the New York Mercantile Exchange. Futures reached $65.60, the highest since Oct. 3. Prices are up 35 percent from a year ago.
Oil is down 7.8 percent from a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina struck the U.S. Gulf of Mexico coast.
World oil demand will accelerate throughout 2006 as Chinese and U.S. consumption picks up, the International Energy Agency said. Demand will grow to 85.1 million barrels a day, after gaining 1.3 percent last year, the agency, an adviser to 26 consuming nations, said today in a monthly report.
Iran's Oil Production
Iran produced 3.9 million barrels of crude oil a day last month, almost 5 percent of world output, according to Bloomberg figures. Saudi Arabia, the world's biggest oil exporter, has 1.3 million barrels a day of spare production capacity. The other members of the Organization of Petroleum Exporting Countries, excluding Iran, Nigeria and Iraq, have less than 300,000 barrels of spare capacity.
Most of Iran's oil exports go to Asia and Europe, according to the U.S. Energy Department. Japan imported an average 651,000 barrels of Iranian oil a day in 2004. European members of the Organization for Economic Cooperation and Development imported an average 841,000 barrels of oil a day from Iran in 2004.
Oil prices more than doubled in 1979 after a revolution in Iran slashed the nation's oil exports. By 1981 U.S. refiners were paying an average $35.24 a barrel, according to Energy Department figures, or $75.44 in 2005 dollars.
The Strait of Hormuz is the world's most important oil transit chokepoint. The strait, which lies between Iran and Oman, controls access to the Persian Gulf. Between 16.5 million and 17 million barrels of oil a day moved through the strait in 2004, according to the U.S. Energy Department.
`Tight Energy Market'
``Market participants fear that if the UN Security Council threatens or decides to impose sanctions on Iran, the country could retaliate by curbing its 2.6 million barrels a day of exports,'' said Eric Chaney, Morgan Stanley's London-based chief European economist, in a note written with Richard Berner, the bank's chief U.S. economist. ``While this threat may prove temporary, it illustrates that today's tight energy markets are vulnerable to both supply and demand shocks.''
Israel cannot tolerate a situation where Iran has control of nuclear weapons, acting Prime Minster Ehud Olmert said today, while declining to comment on whether the country may take military action. In 1981, Israeli jets destroyed a nuclear facility near Baghdad that was being built by then Iraqi leader Saddam Hussein.
Iranian President Mahmoud Ahmadinejad, who maintains that his nation has no intention of making nuclear weapons, said in October that Israel should be ``wiped off the map.''
Brent crude oil for March delivery rose 99 cents, or 1.5 percent, to $64.15 a barrel on the London-based ICE Futures exchange, formerly the International Petroleum Exchange. Prices touched $64.43, the highest since Sept. 28. Brent futures rose 58 cents yesterday when U.S. markets were shut because of the Martin Luther King Jr. holiday.
Lost Nigerian Production
Royal Dutch Shell Plc's venture in Nigeria is losing 221,000 barrels a day of production because of disruptions.
The EA field, which has a capacity of 115,000 barrels a day, was shut on Jan. 11 after four foreign oil workers were kidnapped from a boat near the field, a spokeswoman said. It resumed operation a day later before closing again on Jan. 13 for technical problems.
Shell's Nigerian joint venture is also losing 106,000 barrels a day because of a Jan. 11 explosion at a pipeline in the Brass creek area of the Niger River delta. Together, the two losses represent about 9 percent of total oil output in Nigeria, Africa's biggest producer. Nigeria was the fourth-biggest source of U.S. oil imports in October, the most recent month available.
``If the Nigeria news was happening alone it would do nothing to the market, but together with the risk of Iranian sanctions it takes on a greater importance,'' said Bill O'Grady, an analyst with A.G. Edwards & Sons in St. Louis.
Pakistan
Pakistani Prime Minister Shaukat Aziz today criticized a U.S. air strike last week in his country as ``an unfortunate event that cannot be condoned.'' The attack near the border with Afghanistan prompted nationwide protests.
Al-Qaeda's deputy leader, Ayman al-Zawahiri, who had used safe houses in the area, may have been among five high-ranking members of the group killed in the Jan. 13 strike on the village of Damadola, ABC News reported.
``The Iranian situation is worsening. The U.S. attack in Pakistan, and the likelihood of further trouble in Nigeria are horrible news for consumers,'' Kilduff said.
Heating oil for February delivery jumped 5 cents, or 2.9 percent, to $1.765 a gallon in New York. Futures are 31 percent higher than a year ago. Gasoline for February delivery surged 6.99 cents, or 4 percent, to $1.801 a gallon in New York. Prices are 41 percent higher than a year ago.
Last Updated: January 17, 2006 13:19 EST
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