EMEA News
US Oil Spikes Over Fears of Worsening Nigerian Militant Attacks
Although the gains didn't last, Brent on Monday rose to $50.83, the highest level since November, with analysts pointing to worries about Nigeria's plummeting production levels as being behind the rise.
Nigeria's output has fallen by some 500,000 barrels per day (bpd) following recent militant attacks, and local media reports that the country's federal government has launched an investigation into the possibility that some foreign nations may be backing the militant activities.
Scott Shelton, energy broker with ICAP, said, "At this point, there is no sign that the Nigeria (situation) is getting any better, and it's looking worse," adding that any spare U.S. refining capacity from optimum refinery runs might not be enough to balance the market without deeper stock drawdowns.
In stark contrast to Nigeria's woes, Iran is making up for lost trade with at least 26 foreign tankers each with a 25 million barrel capacity having either loaded crude or fuel oil in the last two weeks, or about load at the Islamic Republic's Kharg Island and Bandar Mahshahr terminals.
Moreover, almost all International Group of P&I Clubs, which represents the world's top 13 ship insurers, have reportedly granted insurance to stakeholders in Iranian trade, which has helped Iran approach pre-sanction production levels of around 2.5 million bpd.
This didn't prevent Bijan Zanganeh, oil minister for Iran, last Friday of accusing his Organization of the Petroleum Exporting Countries colleagues of dumping crude oil into the market in an attempt to lure away his new found customers.
Zanganeh said OPEC members should be more conservative about their production levels in order not to destabilize the market: "I believe all member countries are going to be more realistic; it means everything to all producers to stabilize the situation."
As severe as Nigeria's civil problems may be, Helima Croft, head of commodities strategy at RBC Capital Markets, recently stated that OPEC doesn't have to do anything to re-balance the oil market: "Nigeria can balance this market: when Nigeria goes offline, they go offline for a long time."
