Oil: Prices soar to 7-week high on Iraq petrol line fire; Light Sweet Crude US$32.31 a barrel

Reuters ^ | 08-01-03

[Brian S]

Oil: Prices soar to 7-week high on Iraq petrol line fire 02.08.2003

NEW YORK - Oil prices jumped to a seven-week high on Friday as a petrol pipeline blaze near former dictator Saddam Hussein's hometown added to oilfield looting concerns in Iraq, traders said.

US light sweet crude settled up US$1.82, or nearly 6 per cent, at US$32.31 a barrel while London benchmark Brent crude settled up US$1.62 to within a penny of US$30.00 a barrel.

Firefighters tried in vain to extinguish a blaze at the petrol pipeline in northern Iraq, near the country's biggest refinery. The line runs between Baiji and Tikrit, Hussein's hometown. It was ablaze on Friday, more than 12 hours after a fire broke out, said a spokesman for the US-led administration for Iraq.

The blaze began after an explosion, residents told Reuters, adding that it was the work of saboteurs.

Petrol produced in Iraq mostly meets domestic needs, but the fire added tension to market already nervy by the post-war looting of Iraqi oil fields and installations, especially as the United States heads into winter heating months with low crude stocks.

This could mean consumer countries hoping for cheaper oil will be disappointed, especially as oil stocks in the United States, the world's biggest consumer, are roughly 10 per cent lower than a year ago.

Crude was also supported by a jump in heating oil futures on Friday which rose to 85.12 cents a gallon, the highest price in four months.

"Maybe we will have higher oil prices for a quite a while," said analyst Adam Sieminski of Deutsche Bank. "Inventories are still low."

The looting has dampened Baghdad's oil recovery to output of one million barrels per day (bpd) compared to prewar capacity of 2.8 million bpd.

A strong tropical wave in the far eastern Atlantic Ocean was organizing and could become a tropical depression over the next two days, the National Hurricane Center said on Friday.

The storm was located about 1,220 miles (1950 km) east-southeast of the Windward Islands, moving westward at 20-25 mph (32-40 kph), NHC said.

Prices were also supported by delayed reaction the Organisation of Petroleum Exporting Countries' holding output at 25.4 million bpd at its meeting in Vienna on Thursday.

Analysts predicted the slow return of Iraqi crude exports could lead the cartel to leave production levels intact for the rest of the year.

Some Opec insiders and analysts now believe the cartel will be able to avoid production cuts for the rest of the year as Iraq's struggles to get oil flows back to pre-war levels will keep supplies tight and sustain high prices.

"It's unfortunate for Iraq, but depending on what happens there we could get away with doing nothing this year," said a senior Opec delegate.

Opec will meet again on Sept. 24 to review supplies and has said it will increase production if prices exceed its target range of US$22-US$28 for its reference basket of crudes.

- REUTERS

[AntiGuv]

I've mentioned before that all the Saddamist guerrillas need do to keep Iraq on its knees is sabotage an oil pipeline every fortnight or so....

[RightWhale]

We're not out of the woods.

[Brian S]

$30+ crude a economic "recovery" does not make...

[Shermy]

Recovery for whom? It helps OPEC immensely, especially the Saudis.

[Brian S]

True and it hasn't hurt the US based energy companies either. Just peruse their latest earnings reports.

[X-FID]

Iraq's struggles to get oil flows back to pre-war levels

And pre-war levels means what?

[Libertarianize the GOP]

http://www.freerepublic.com/perl/bump-list

[mewzilla]

Did OPEC just announce in the last couple of days that they won't be cutting production quotas for a while? The price shouldn't get too bad.

[AntiGuv]

2.5-2.7 million bpd.

[rockfish59]

After voting down a proposed 9 cent a gallon gas tax hike last year by a 2:1 margin, our 'wonderful' legislators recently passed a 'nickle only' hike effective July 1st!

I e'd them and said that when the next big quake hits I hope the capitol dome drops on every damned one of them so we can get some new blood in there!

[AntiGuv]

Not counting unauthorized smuggling production.

[dennisw]

I've mentioned before that all the Saddamist guerrillas need do to keep Iraq on its knees is sabotage an oil pipeline every fortnight or so.......


I was thinking oil pipeline sabatoge, sabatoge of everything to do with oil, when we first started making noises about evicting the Saddam regime

[Eaker]

Pingaroo.........

[Brian S]

That is correct, no cutbacks, but why should they. $30+ is gravy train profits for them and death to any economic recovery in this the US.

In fact, you will find anytime the price of crude hits and maintains $30+ a barrel, the US economy slides into recession.

[mewzilla]

True, but they were planning on cutting the production quotas. I suspect if the price doesn't stabilize, they'll open the spigots a bit.

[Brian S]

One thing that would open the spigot in very quick order would be for the US to threaten to tap the strategic oil reserves. It worked wonders in the past to "loosen the flow" and, if GWB wants a economic recovery...its there at his disposal.

If you really want to put disposable income into the pockets of the US consumer, drive energy prices down!

Thats real, discreationary $$$ to pump into the economy..for all americans.

[lilylangtree]

What I don't understand is why gas prices are so high? They're near or at the highest prices that occurred during the Iraqi war, and the war is over. Plus, here in WA prices are an average of $1.66 and just across the ID border gas prices are an average $1.54.

[Brian S]

I believe the crude price is near or at the high before/during the Iraqi war also.

I don't have an answer as to why myself.

[Nebullis]

Keep your eye and money on natural gas.