Crude oil prices yesterday surged to a record near $77 per barrel as the international market was hit with fresh concerns over oil supply from Nigeria following the attack on an Agip pipeline in Bayelsa State as well as crises in the Middle East.
Agip may lose as much as 120,000 barrels of oil a day after the two pipelines were attacked while Israel attacked Lebanon in retaliation for raids by Hezbollah terrorists. US crude traded at $76.85, while London Brent went up to $76.95.
In Nigeria, two suspected explosions at a crude pipeline operated by Agip, a unit of Italy’s Eni, caused oil spills which Eni denied any act of sabotage saying damage would be repaired soon.
The oil spillage occurred on a Nigeria Agip Oil Company (NAOC) pipeline at Lagosgbene in Brass Local Government Area of Bayelsa State, following an explosion on its 10 inch pipeline along the River Nun near Igbomotoro Village.
The explosion followed the massive spillage along the Clough Creek flow station in Tebidaba in Southern Ijaw LGA where a similar explosion had earlier taken place.
Traders said the upswing in oil prices was also triggered by other global factors including the conflict between Israel and Hizbollah in Lebanon, which has already heightened international tensions, the Iran nuclear row now appearing to be heading to the United Nations Security Council and sharp drop in crude inventories in the US.
The Special Adviser to the Governor of Rivers State on Oil and Gas, Chief Dikivie Ekiogha who confirmed both incidents said they are still trying to get officials of the NAOC, the owners of the facilities affected by the explosion to know the extent of damage.
Shell Petroleum Develop-ment Company (SPDC) which pumps about half of the country’s output, had halted about 473,000 barrels a day of production after a series of militant attacks since January.
Foreign workers of energy and oil services companies have been targeted by militants in the Delta region who are unhappy about the extent of foreign control over the country’s oil industry.
An employee of Royal Boskalis Westminster NV, the world’s largest dredger, was freed July 10 after being kidnapped by unidentified assailants in Nigeria while working on a Shell project in Bayelsa state.
Oil prices were also pushed up when the Energy Department reported yesterday US gasoline stockpiles fell more than expected last week, amid higher fuel demand during summer driving season.
Supplies of the motor-fuel fell 426,000 barrels in the week ended July 7, the department said, almost twice the 250,000 barrels forecast in a Bloomberg News survey.
According to reports, pump prices for regular gasoline averaged $2.961 a gallon Wednesday, up 28 percent from a year before, according to the American Automobile Association.
Yesterday, gasoline for August delivery was up 1.91 cents, 0.9 percent, at $2.275 a gallon in New York while the contract rose yesterday 2.9 percent to $2.2559.
The Energy Department report yesterday showed US oil stockpiles fell by 6 million barrels, almost five times the decline forecast by analysts while daily gasoline demand exceeded 9.6 million barrels for a second week.
At the UN, US Ambassador John Bolton said yesterday the Security Council may vote next week to demand Iran stop enriching uranium.
The US and European Union suspect Iran wants the enriched uranium for weapons but Iran has so far refused to respond to a five-week-old offer of incentives to halt its research. It claims it wants to build nuclear power plants.
China and Russia agreed to support a binding UN resolution demanding that Iran suspend uranium enrichment or face economic penalties, France’s foreign minister said after a major-power meeting in Paris yesterday.
Iranian President Mahmoud Ahmadinejad threatened to revise Iran’s cooperation with international bodies monitoring its nuclear program after the dispute was referred back to the Security Council, Agence France-Presse reported, citing an address by Ahmadinejad on state television.