The continued hostage crisis in Nigeria’s Niger Delta, and more threats by militants to further disrupt the country’s oil production, are having an effect on world oil prices.
Oil prices today were above 63 dollars a barrel. Besides the situation in Nigeria, there’s also the possibility that Iran could cut production if international sanctions are imposed over its nuclear program.
Deborah White is a senior energy analyst with Societe Generale Corporate and Investment Banking. From Paris, she spoke to English to Africa reporter Joe De Capua about the effects of the Niger Delta situation: “The situation in the Delta has made the oil market extremely nervous. I mean we are used to the fact that Shell and Exxon lose production from time to time. We look at the problems in the Delta from a distance, so we’re looking at the supply effects. But when we have the supply losses of up to 455,000 kdb (barrels per day), as it has been recently, it goes straight to the headlines. It’s on the market’s mind. And when the rebels start to say, yes, they want to shut down 20 percent of Nigerian production, and here we would be talking 500,000 kdb, on a continued basis – and then when they up the ante to say as they did yesterday (Sunday)…they would like to shut down an additional million barrels of day, actually that calmed the market because it seemed so unreasonably high.”
Asked whether the militants have the ability to cause such a disruption, White says, “The militants have the capacity to shutdown certainly 500 or 600 or 700,000 barrels a day. I don’t believe they have the capacity to shut down and to keep down a million and a half barrels a day.”
As for the situation in Iran over its intentions to enrich uranium for nuclear production, she says, “Honestly, the Iranian question, we’ll say, the nuclear question, has been going on so long that I would say it had been fully factored into oil prices. Oil prices came off a bit when we thought the Russians had brokered a deal with the Iranians. And we’re now pretty much to what the market had expected with Iran standing on its sovereign right to do enrichment.”
The analyst says OPEC had been on the verge of announcing a cutback in oil production, but decided to wait due to the situation in the Niger Delta.