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NEW YORK: Oil prices rallied on Monday after militants attacked a Royal Dutch Shell pipeline in Nigeria, leading the Anglo-Dutch energy giant to reduce output.
New York's main contract, light sweet crude for September, advanced 1.46 dollars to close at 124.73 dollars a barrel.
In London, Brent North Sea crude for September delivery climbed 1.32 dollars to settle at 125.84 dollars a barrel.
Rebels from the Movement for the Emancipation of the Niger Delta earlier claimed that "heavily armed" MEND fighters had attacked two pipelines in Nigeria's main oil-producing region in the southern Rivers state.
A Shell spokesman confirmed damage to the Kula pipeline but was unable to confirm rebel claims of an attack to a second pipeline.
Spokesman Rainer Winzenried told AFP that one of the pipelines had been affected by an attack and that the company had decided to reduce part of the production to avoid further damage to the environment.
He declined to indicate the scale of the output reduction.
The sabotage was the latest to rock Shell, a major oil operator in Nigeria. The Anglo-Dutch oil group only recently resumed full deliveries from its offshore Bonga oilfield in Nigeria, shut down in June following an attack by MEND.
The oil-rich Niger Delta has seen numerous kidnappings in recent months targeting foreign energy firms, claimed by militants demanding a greater share of oil wealth for the region's inhabitants.
News of the latest pipeline sabotage came after the release Saturday of eight foreign workers who had been kidnapped near a major oil export terminal in southern Nigeria. No ransom was paid.
Violence in the southern region has reduced Nigeria's total oil production by a quarter since January 2006.
Nigeria had been Africa's biggest oil producer until it was overtaken in April by Angola, according to the Organisation of the Petroleum Exporting Countries (OPEC) figures.
Phil Flynn at Alaron Trading pointed out that Nigerian crude is in high demand because "it is sweet and easy to refine."
"That lack of sweet crude oil has put increasing pressure on the world oil market," Flynn said.
Prices also climbed as the market tracked developments over oil-rich Iran's disputed nuclear programme.
"Crude futures were higher amid geopolitical concerns over Iran and Nigeria," said Sucden analyst Nimit Khamar.
The Islamic Republic's President Mahmoud Ahmadinejad said on Monday that if the United States adopted a genuinely new approach to his country, Tehran would respond in a positive way.
Ahmadinejad's comments, in an interview with US broadcaster NBC, come after he said on Saturday that Iran had boosted the number of uranium-enriching centrifuges to up to 6,000, in an expansion of its nuclear drive that defies international calls for a freeze.
Iran denies seeking nuclear weapons, insisting that its program is designed to provide future energy for its growing population.
"These events (in Iran and Nigeria) just go to remind the market participants that geopolitical risks still remain and have a potential to disrupt oil supply," added Khamar. - AFP/de
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