Oil prices spike past US$98 as tensions seethe in key producing nations

20-Feb-08

World oil prices spiked past US$98 per barrel as the market seethed under the strain of tensions in key producing nations. Speculative gains were driven by geopolitical concerns that have cropped up due to tensions in Venezuela and Nigeria, and also on speculation surrounding OPEC's next move when they meet in March. Prices have risen despite worries about a possible slowdown in demand from key consumer USA. New York's main contract, light sweet crude for March delivery rose to US$98.40 per barrel. Brent North Sea crude for April delivery rose to US$97.14. Venezuelan has threatened to cut off oil deliveries to the United States if his country was attacked. A legal battle ensued, in a move by ExxonMobil to secure compensation after Venezuela's government nationalized key oil fields in the Orinoco basin, including two ExxonMobil operations. US oil company ExxonMobil is reported to have won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing US$12 bln of Venezuela's state-owned oil producer PDVSA assets in those jurisdictions. In Nigeria, since the beginning of 2006, attacks by militants have cut oil production by 25%. Last month, Shell declared a force majeure on exports from Forcados for the rest of January and February after pipeline sabotage.