Nigeria is losing its influence in the international oil market as a result of the Niger Delta crisis, analysts have said.
Some global oil market experts have warned that continued attacks and sabotage of oil installations as well as kidnappings in the Niger Delta region, could result in further losses of production capacity and cripple Nigeria�s capacity to meet her production benchmarks.
Already, the country�s oil output has plunged by a quarter since early 2006 in the face of serial attacks on oil production facilities, kidnappings, gun battles among rival Niger Delta gangs and pitched battles between them and security forces.
The influential Arab Oil and Gas magazine estimates that up to 200 foreign oil militants have been kidnapped forcing oil companies to abandon productive oil fields.
Shell Group says it has lost 447,000 barrels of crude oil per day as a result of the violence and sabotage of its facilities.
Francis Perrin, an analyst with Arab Oil and Gas, citing studies on the subject, says more oil platforms are being abandoned by the major oil companies.
Perrin and other observers worry that unless checked, the unrest in the Niger Delta could further reduce Nigeria�s clout in the Organisation of Petroleum Exporting Countries and even limit the cartel�s overall effectiveness in moderating production levels and prices in the international oil markets.
Nigeria is Africa�s biggest producer and accounts for a daily output of 2.6million barrels at peak production, according to Agence France Presse.
�The most dangerous areas have been abandoned by oil company operators,� said.
He said despite the election of President Umaru Yar�Adua, in April, �we don�t have the impression the government has the means to find a lasting solution,� Perrin said.
The International Energy Agency also estimates that without the unrest, Nigerian daily outout would come to more than 3.0 million barrels, lifting it from current OPEC sixth largest producer.
But the IEA has also noted that Nigeria�s less vulnerable offshore production is gaining momentum, currently amounting to 900,000 barrels a day but with the capacity to eventually add 500,000 barrels.
The government�s overall output target is 4.0 million barrels a day in 2010.
But at the moment, the paralysis afflicting oil operations in the Niger Delta is affecting the production capacity of the OPEC, in which Nigeria is now the sixth largest exporter. Under normal conditions, it would be the third largest.
At a time when oil demand is soaring, OPEC production is also hampered by instability in Iraq.
�If Iraq were capable of producing at its pre-war level and if there were a return to security in Nigeria, we would have an extra 1.0 million barrels a day on the market, which would ease pressure on prices,� said AFP.
In Nigeria, recent attacks � gunmen killed one foreign oil worker and kidnapped two others in a raid Thursday on a compound belonging to Italian oil company Saipem � have helped push oil prices above $80 a barrel.
Within OPEC, Nigeria�s impact is waning. �It�s a country that for months has been unable to meet its (production) quota,� Perrin observed.
On Friday, crude oil prices retreated Friday after an early spike, as traders locked in gains after a storm in the Gulf of Mexico weakened as it moved ashore.
New York�s main futures contract, light sweet crude for delivery in November, fell by $1.22 to close at $81.66 per barrel. Last week, New York crude hit an all-time record of $84.10 per barrel.
The price of London Brent crude oil on Friday rocketed above $81 a barrel for the first time, but settled with a loss of 86 cents at $79.17 a barrel.
Prices had spiked by more than two and a half dollars on Thursday, with London smashing through $80 for the first ever time owing to stormy weather in the rig-heavy Gulf of Mexico.
Hurricane Lorenzo barrelled ashore from the Gulf of Mexico but rapidly lost its punch. Three people were reported killed in Mexico.
Downgraded to a tropical storm, Lorenzo soaked large areas of central Mexico, leading to fear of further landslides in mountainous regions.
Analysts said the record-breaking run for oil in the past week was not explained by market fundamentals, and that it appeared more speculative money was pouring in.
�Prices have seemingly moved inexplicably,� said Eric Wittenauer at AG Edwards.
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