Oil prices spike by over US$1.50 as violence escalate in Nigeria

21-Feb-06

Oil prices rose by over US$1.50 a barrel as militant action against oil pipelines in the Niger Delta that led to a 20% cut in Nigeria's oil production. April Brent crude futures rose to US$61.48 a barrel on London's ICE Futures exchange. Trading on the New York Mercantile Exchange was closed for the Presidents Day holiday. Militants attacked a Shell-oil operated oil pipeline switching station and a boat, vowing to spread their campaign across the petroleum-rich south from where most of the African oil giant's crude is pumped. The group took nine foreign oil workers hostage over the weekend. These events potentially put the focus back on the supply side, with the understanding that a large portion of oil supply is in high-risk countries. Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million bpd. Rebel violence in Iraq also has increased over the past few days, with sabotage to northern Iraqi oil installations halting exports of 400,000 bpd. The country produces about 2 million bpd, down by about 800,000 barrels from before the U.S.-led invasion.