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Crude prices rise as Ivan halts production in Gulf of Mexico

The Guardian: Crude prices rise as Ivan halts production in Gulf of Mexico

“There was encouraging demand for new exploration acreage in the UK North Sea. Energy minister Mike O’Brien offered 97 offshore licences to 58 companies. Among those that have been awarded new scope for work in the North Sea are BG, Shell and Total.”

TERRY MACALISTER

Sep 15, 2004

Opec is under pressure to lift official production levels at a critical meeting today as global crude prices rose again on the back of pipeline attacks in Iraq and hurricanes heading for the Gulf of Mexico.

The cartel of leading oil producers is already pumping more than its official quota to meet escalating demand but prices have continued to rise, gaining a further 75 cents to $44.62 a barrel in New York yesterday.

Saudi Arabia said it would continue to supply a quota-busting 9.5m barrels a day in October to bring down prices.

“Forty dollars is not low enough. The fundamentals do not support this price and Opec does not support this price,” said Saudi oil minister Ali al-Naimi ahead of the meeting in Vienna.

Algeria would like to see an 8% rise in output targets while Kuwait believes a further increase would give the right signal to the market. But Libya said there was still a chance prices could suddenly “crash”, and Saudi is not convinced of the need to change quotas.

Opec is also expected to review whether the $22-$28 official price target range should be raised to $30 per barrel, although some cartel members fear this would alarm traders.

The cost of crude has dropped from the record $49.40 level last month, but was back up again yesterday as an attack on a pipeline in northern Iraq brought a halt to exports from the Turkish port of Ceyhan.

As many as 300,000 barrels a day of crude exports from the Kirkuk fields were hit a week after the main line to the Mediterranean was taken out of action by saboteurs. A pipeline in the south of Iraq was also hit on Monday, but this did not stop exports.

The Middle East problems were compounded by production being halted in the Mexican Gulf as more than 3,000 oil workers were evacuated from platforms as hurricane Ivan headed for the area.

Shell shut down 272,000 barrels per day of production while ExxonMobil, ChevronTexaco and Total followed suit as the storm prepared to arrive on land from the Caribbean.

“US crude inventories have been drawing down as we head into winter; any headline on supply interruptions will push the market up,” said Tony Nunan, a general manager at Mitsubishi in Tokyo.

There was encouraging demand for new exploration acreage in the UK North Sea. Energy minister Mike O’Brien offered 97 offshore licences to 58 companies. Among those that have been awarded new scope for work in the North Sea are BG, Shell and Total.

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