Oil Prices Rebound as Market Digests Saddam News
Monday, December 15, 2003
LONDON — Oil prices reversed heavy early losses on Monday on warnings that the capture of Saddam Hussein (search) would not mean an end to attacks on Iraq's oil infrastructure that have hampered its return to pre-war export levels.
London's Brent crude (search) rose three cents to $30.40 a barrel after U.S. soldiers on Saturday found the former Iraqi leader hiding in a pit at a farm near his hometown Tikrit in northern Iraq.
U.S. light crude on the New York Mercantile Exchange (search) was up 26 cents at $33.30 a barrel in a rapid rebound from initial losses of $1.30 a barrel.
"There should be an improvement in security, but we can't eliminate any other possible (pipeline) attacks in the future," Iraqi Oil Minister Ibrahim Bahr al-Uloum told Reuters by telephone from Tehran.
Sabotage attacks have kept the northern line from Iraq's Kirkuk fields to the Turkish Mediterranean closed since the war, cutting oil export revenue funds for reconstruction.
Iraq's sole oil export option for now is the southern Basra oil terminal (search) in the Gulf, which has been shipping just under 1.5 million barrels per day of Basra crude so far this month.
"We plan to reopen the northern pipeline when the security situation permits," Uloum said, without further elaboration.
He said there was no immediate alteration to the timetable for increasing oil exports, forecasting sales of two million bpd seen by end-March 2004.
The attacks on Iraq's oil infrastructure have helped hold oil prices strong this year, with OPEC's (search) reference crude price averaging $27.99 up to December 11 -- right at the top end of the cartel's $22-28 target price band.
U.S. crude prices have risen nine percent in the last three weeks as crude oil and natural gas inventories decline ahead of winter.
"We don't think it will be too long before the markets focus again on market fundamentals, relegating the Saddam saga back to the sidelines," said Edward Meir of brokers Man Financial in a report.
Saudi Arabia, the world's biggest oil exporter, said on Saturday that current high oil prices were not due to any supply crunch.
"It has nothing to do with supply shortages or anything like that," Saudi Oil Minister Ali al-Naimi said in Cairo.
Naimi said he was concerned about a surge in oil prices but the rise was due to cold U.S. weather and speculation from investment funds. |
