Nigeria
violence may lead OPEC to hold output: analyst
By Perrine Faye
LONDON
Petroleumworld.com
02 21 06
Violent unrest in Nigeria that has led to a 25-percent cut in
the country's crude output could persuade OPEC to maintain its
level of oil output at a near historic high when it meets next
month, an energy analyst said here Monday.
Prior to violence breaking out last Thursday in Nigeria, Africa's
biggest producer of crude, analysts had predicted that the Organization
of Petroleum Exporting Countries would cut output when it meets
in Vienna at the start of March.
But Global Insight analyst Simon Wardell told AFP: "If the
Nigerian situation means prices are 60 to 65 dollars when they
(OPEC) next meet, then again they're going to have a really difficult
time in cutting production back, so they'll probably keep things
steady."
His comments were made as Nigerian separatist guerrillas taunted
the army with claims of further attacks after a weekend of violence
forced the energy giant Shell to slash the country's oil exports
by a fifth.
The news prompted oil prices to spike almost 3.0 percent in London
trading, as they struck an intra-day high of 61.63 dollars per
barrel. Trading in New York was suspended for a national holiday
but was expected to open higher Tuesday.
Wardell added that in reaction to the Nigeria unrest, OPEC would
prefer to cut production.
"It all depends on the price, that's what they'll be reacting
to," he added.
Kuwait's energy minister, however, said Monday that a cut in oil
production may be necessary at OPEC's next meeting since over-supply
may reach two million barrels per day (bpd) in the second quarter.
"We believe the market is well-supplied and we believe the
second quarter will be over-supplied... with between 1-2 million
bpd," Sheikh Ahmad Fahd al-Sabah told reporters in his country's
parliament.
"We have to wait for our March meeting. If necessary and
if prices will go back to be determined by supply and demand,
we have to do our cut," Sheikh Ahmad said.
"But if prices continue as they are now... we will continue
to support stable prices for the future," he added.
At its last meeting on January 31, OPEC decided to keep its production
ceiling of 28 million barrels per day.
The widely-expected move followed a 12.0-percent spike in the
price of crude since the start of the year fuelled by controversy
over Iran's nuclear programme and a series of previous attacks
against oil installations in Nigeria.
OPEC, which produces about 40 percent of the world's crude, is
actually producing more than 29 million barrels per day including
output from Iraq, which is not included in the official quota.
Nigeria produces light, sweet crude, which is easier and cheaper
to refine and thus in greater demand, than heavy, sour crude produced
by oil kingpin Saudi Arabia.
AFP 02 20 06
Copyright
© 2006 AFP. All rights reserved
