Oil Prices slide

22-Mar-05

After peaking in the day at US$57.12, New York's main contract, light sweet crude for delivery in April, fell to US$56.35 per barrel. In London, the price of Brent North Sea crude oil for delivery in May dropped to US$55.20 per barrel. Rumors that OPEC could raise oil production ceiling soon, triggered this fall. However, a slide in prices was prevented by the threat of a strike in the Nigerian energy sector. On a 16 March meeting at Iranian city of Isfahan, OPEC had decided to raise crude output from 27 million to 27.5 million bpd. The option of further raising output by 500,000 bpd could be considered by OPEC, should prices remain high. A possibility of the second rise in output, estimated to be implemented within ten days of the first one has triggered the rumors and helped push prices down in early deals. Announcements of a warning strike in Nigeria next month have prevented a slide in prices. Nigeria's main oil unions backed down from calling an immediate strike to protest the use of casual labor, but launched a new 21-day ultimatum to energy giants and the government. Threats of a 3 day "warning strike" from April 11 has been issued, unless the firms ceased using contract employees. Nigeria is the world's ninth-biggest oil producer and disruption to its exports of around 2.5 million bpd could send prices to new record high points.