Crude Oil Prices Rise on Middle East Crisis
Energy
By Mike Oduniyi with Agency report
Crude oil prices again rose to a two-week high after a U.S. contractor was beheaded last week in Saudi Arabia, raising the prospect that foreign workers will leave the world's biggest oil exporter.
The killing of Paul Johnson, a New Jersey man abducted by terrorists who demanded the release of militants held in the kingdom, as well as the the distressing news of the murder of another U.S. worker in Saudi Arabia is adding to concern in the market and triggered buying at the end of the week, analysts said.
Prices had taken a dive soon after the Organisation of Petroleum Exporting Countries (OPEC) announced it was raising production ceiling by 2.5 million barrels per day (bpd) from 23.5 million to 26 million bpd from $42 per barrel to $35.
However, last week's sabotage on Iraqi crude pipeline sent oil prices spiralling upwards again.
Crude oil for July delivery rose by 0.8 percent, to settle at $38.75 a barrel on the New York Mercantile Exchange, the highest close since June 3 when OPEC raised production quotas. In London, the August Brent crude oil futures contract was unchanged at $36.21 a barrel on the International Petroleum Exchange.
Rising oil prices have a telling effect on Nigeria domestic fuel pump prices. Nigeria, OPEC sixth largest oil producer rely on heavy fuel imports to meet local demand for petroleum products.
The recent attacks in Saudi Arabia prompted international companies to evacuate their foreign workers and families from the kingdom, where more than 100,000 Westerners, mainly US and UK citizens, live.
OPEC President had last week cautioned against expectation of a fall in crude prices. But market analysts were optimistic at the weekend that oil futures will fall next week when OPEC begins to implement its new production ceiling.
Iraq, the Middle East's fifth-largest oil producer said it lost about $1 billion in oil income during the last year as a result of sabotage to its oil infrastructure, the country's prime minister said.
Attacks against pipelines and other facilities that help Iraq export oil through the Persian Gulf and Turkey will continue, Ayad Allawi said in comments distributed by the U.S.- led occupation authority. Iraq relies on oil for almost all its export revenue, which it uses to fund government salaries and reconstruction. Since resuming exports in June last year following March's U.S.- invasion, Iraq has collected almost $10.8 billion in oil revenue in its Development Fund of Iraq, set up to channel revenue from various sources.
Iraq may resume exporting oil today after damage caused by sabotage to a southern pipeline is fixed.
There were hoped however, that the country might resume production and export shortly.
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