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Bloomberg: Oil Surges to $76 After BP Shuts Alaska Field, Largest in U.S.

EXTRACT: Militant attacks and pipeline leaks have cut production in Nigeria, Africa’s biggest producer, by about 800,000 barrels a day. Gunmen killed five Nigerian oil workers and injured three others contracted to a Royal Dutch Shell Plc venture, Shell said Aug. 5. The Philippine embassy in Nigeria has sent a two-man team to Port Harcourt to help obtain the release of three Filipino workers kidnapped in Rivers State Aug. 4. 

THE ARTICLE 

Aug. 7 (Bloomberg) — Crude oil surged 1.7 percent to $76 a barrel after BP Plc said it will shut Alaska’s Prudhoe Bay field, the largest in the U.S., because of corrosion in a pipeline.

Closure of some 400,000 barrels a day of output, or 8 percent of the nation’s total, after a leak will take “days,” Ronnie Chappell, a spokesman for London-based BP, the world’s second-largest publicly traded oil company, said. The closure comes amid peak summer fuel demand in the U.S.

“The BP shutdown is another bullish factor that’s added to the market especially with strong gasoline demand in the U.S.,” said Tetsu Emori, chief commodity strategist for Mitsui Bussan Futures Ltd. in Tokyo. “It’s definitely having a big impact on the market.”

Crude oil for September delivery rose as much as $1.24, or 1.7 percent, to $76 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $75.90 at 12:36 p.m. in Singapore.

Oil has risen 24 percent in New York this year on concern that faltering supply to the U.S. won’t keep up with rising demand in the world’s largest energy consumer. Militant attacks have slashed output in Nigeria, Africa’s largest producer, by about one-third. Production from Mexico’s Cantarell field, the world’s second largest, will fall 8 percent this year.

In London, Brent crude oil for September settlement gained $1, or 1.3 percent, to $77.17 in electronic trading on the ICE Futures exchange.

Rocket Attacks

Oil rose to a record $78.40 on July 14 on concern that conflict in the Middle East, home to one-third of global supply, may spread. The fighting entered its fourth week as Israel and Hezbollah, as Islamic militia backed by Iran, intensified their attacks. Aircraft targeted missile launching sites in southern Lebanon after 140 rockets struck northern Israel yesterday, killing 15 people, 12 of them reserve soldiers.

“There’s so much worry about supplies right now,” said Anthony Nunan, assistant general manager of petroleum business at Mitsubishi Corp. in Tokyo. “We may be due for a showdown in the region if other Middle East nations get involved and that will surely pull the market higher.”

Speculation that supplies from Iran, the world’s fourth- largest producer, may be disrupted if the UN imposes sanctions to halt the Islamic republic’s nuclear research has also pushed prices higher this year.

Iran “will not agree to suspension” of its uranium enrichment program, Ali Larijani, Iran’s nuclear negotiator, said at a press conference in Tehran yesterday. The UN “resolution will have no effect on Iran’s determination. Iran will continue its nuclear activity.”

Facing Sanctions

The UN Security Council last month gave Iran until Aug. 31 to accept a European Union-proposed package of incentives to end its uranium enrichment work. Iran faces economic sanctions if it rejects the plan.

Militant attacks and pipeline leaks have cut production in Nigeria, Africa’s biggest producer, by about 800,000 barrels a day. Gunmen killed five Nigerian oil workers and injured three others contracted to a Royal Dutch Shell Plc venture, Shell said Aug. 5. The Philippine embassy in Nigeria has sent a two-man team to Port Harcourt to help obtain the release of three Filipino workers kidnapped in Rivers State Aug. 4.

To contact the reporter on this story:
Nesa Subrahmaniyan in Singapore at  [email protected].
Last Updated: August 7, 2006 00:48 EDT

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