Oil prices firm as tension in the Gulf increasing
Oil prices firm as tension in the Gulf increasing
LONDON (Reuter): Oil prices gained some 30 U.S. cents a barrel
yesterday as international markets reacted to the buildup of
Iraqi troops along the border with Kuwait.
At midday, world benchmark Brent Blend crude stood 31 cents
higher on futures markets at $17.23 a barrel for November
delivery, scarcely moved from a firm opening at $17.25.
Initial reports on Iraqi troop movements on Friday propelled
Brent prices up to a high of $17.32, but profit-taking ahead of
the weekend wiped out most of those gains late on Friday.
Brokers noted prices were heading upwards before news of
Iraqi's latest move broke.
"The market's pretty relaxed this morning," said one broker.
"The (Iraqi) news would have had more impact if we'd been in a
bearish market," he said.
Others noted that although the market's immediate reaction was
bullish, prices were unlikely to gain any further upward impetus
unless Kuwaiti oil supplies came under threat.
"There's been no threat to Kuwaiti or Saudi oil supplies so
far and we've already seen what the allied forces can do back in
1990 when they faced a much stronger force," said one market
analyst.
Oil prices briefly touched $40.00 during that crisis but
tumbled to just $16.00 in early 1991 when it became clear that
Iraq could not damage huge Saudi Arabian production capacity.
OPEC responded to the shortfall in output from Kuwait and Iraq
by turning up the taps and adding more than a million barrels per
day (bpd) in the fourth quarter 1990.
Observers believe there is little chance of any serious
disruption now to Kuwait's two million bpd of crude output.
But brokers said Baghdad's unpredictability would continue to
send jitters through the market.
"Although Kuwait's oil installations are well protected, it
would only take one missile attack on a Kuwaiti refinery to send
prices soaring," brokers GNI said in a market report.
Production
Meanwhile, the Middle East Economic Survey (MEES) estimated
yesterday that OPEC went back over its output ceiling in
September as the result of a recovery in Nigerian production.
The Cyprus-based newsletter put output by OPEC at 24.78
million bpd, compared with 24.45 million bpd in August -- the
sole month this year that it went under its 24.52 million bpd
ceiling.
A two-month oil strike in Nigeria had boosted the market at a
time -- the northern summer -- when world demand was lower,
though Nigerian oil exports did not suffer greatly.
MEES estimated Nigerian output to have risen by 350,000 bpd to
1.82 million and Iranian output to have climbed by 35,000 bpd to
3.615 million.
A Reuter survey had earlier estimated September output for the
group at 24.93 million bpd, including Nigeria at 1.83 million and
Iran at 3.62 million.