Oil Industry Headlines: Week of September 28
As OPEC prepares to meet at its December summit in Abu Dhabi, international banks and analysts are speculating that it will not agree to an additional production boost despite record prices. Recently, prices soared beyond $80 a barrel just days after OPEC announced a 500,000 barrel per day increase in production beginning Oct. 1. The price jump surprised just about everyone and prompted analysts to begin calling for an additional production boost from OPEC. However, the “weak US dollar is slashing the value of oil revenue for the biggest crude producers, leading analysts to predict that OPEC will not rush to hike output again despite tight world energy supplies,” reported the Gulf Times. The reason? In the GT article, PFC Energy analyst Paul Tossetti explains that “Gulf countries import lots of European products, especially capital goods and luxury products . . . The dollar weakness has affected their buying power in Europe.” Going forward, OPEC may change the oil price to a currency basket instead of the dollar. How this would affect its decision on production increases remains uncertain. In an ill-timed interview, Nigerian President Umaru Yar’Adua said that the government and local insurgents responsible for disrupting oil production are moving toward a peace plan. According to Forbes, Yar’Adua said on Thursday that “The pace and frequency of the kidnapping has gone down drastically in the last 1 1/2 months. This is a result of the dialogue that is going on.” He added, “So many oil stations that for the past two years have been closed have been opened as a result of the gains we have made in talking directly with the militants.” These statements came just four days after one of one of the main armed groups operating in the oil rich Niger Delta released a statement, calling off a four month ceasefire. In late 2005, the Movement for the Emancipation of the Niger Delta, or MEND, began actively seeking to disrupt operations in the Niger Delta. By the first quarter of 2006, production levels were reduced by twenty-five percent, where they remain (for the most part) today.Published Thursday, October 4th, 2007 at 3:26 pm and filed under Industry News.