Oil price recovers on Iraq's news
Oil price recovers on Iraq's news
LONDON (Reuters): Oil prices recovered some losses on Friday after slumping heavily when Iraq vowed not to disrupt its export sales of more than two million barrels per day (bpd).
London Brent crude futures were trading up 55 cents at $29.81, having skidded $1.28 the previous day.
U.S. light crude oil futures on off-hours trade were up 36 cents at $30.70 per barrel.
Oil prices have been roaming near decade highs above $30 a barrel as traders feared Baghdad might halt or slow its crude oil exports if a Kuwaiti claim for Gulf War compensation went through this week without any gesture towards Baghdad.
But those concerns eased after the five permanent United Nations Security Council powers, in approving a Kuwaiti claim for $15.9 billion in Iraqi compensation, agreed to reduce the rate of reparations Baghdad pays for its 1990 invasion of Kuwait.
That was enough of a concession to stop Iraq from wielding its powerful oil weapon.
"We are not going to hold back supplies," Iraqi Vice President Taha Yassin Ramadan said late on Thursday at OPEC's summit in Caracas.
"Iraq is not an opportunist...Iraq has never held back oil supplies under any circumstances as long as it has the ability to (keep pumping).
His comments helped alleviate market anxiety.
"This removes the long-running issue of the UN compensation case off the worry board for oil traders," said Peter Gignoux, head of the energy desk at Schroder Salomon Smith Barney.
Oil prices already had started to unravel on Thursday after OPEC kingpin Saudi Arabia pledged to supply more oil if needed to stabilize the market and cool overheated prices.
But despite recent declines, prices still remain above a target set by the Organization of Petroleum Exporting Countries (OPEC) of $22-28 per barrel.
Oil traders have been keeping a close watch on the European Union to see whether the group would match Washington's move to release emergency oil stockpiles to stave off winter fuel shortages.
European finance ministers were due to debate the possible release at a meeting later on Friday in Brussels.
The United States, fearing that low crude and refined product inventories will not meet demand in the upcoming winter, has helped oil's recent decline by unlocking emergency stockpiles.
Washington last week gave the go-ahead to release one million bpd of reserve crude throughout October to ward off any shortfall. Oil fell about $3 on the decision.
But some analysts said the release may have backfired as lower crude and product prices had made it more profitable to ship heating oil barrels to Europe.
Traders in the U.S. Gulf Coast and New York have already reported half a dozen cargoes being loaded for export since Washington's announcement on Friday.
OPEC heads of state, rounding off a two-day summit in Venezuela to celebrate the cartel's 40th birthday, laid blame for high oil prices squarely on industrialized nations.
The producers' group denied it was endangering world economic growth and pointed the finger instead at high taxation rates on fuel in the developed world.
"Excessive taxation on petroleum products accounts for the highest share of the final price to the consumers in the major consuming countries," said an OPEC declaration issued as the summit drew to a close on Thursday.
It again called on consumer countries to reduce fuel taxes for the benefit of their citizens and world growth.