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.