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Bloomberg: Crude Oil Rises as Storm Forms, Eni Workers Abducted in Nigeria

By Nesa Subrahmaniyan

Aug. 25 (Bloomberg) — Oil rose in New York to the highest in more than a week on concern supply may be disrupted as a storm that is forming in the Atlantic may move to the Gulf of Mexico, and three oil workers were kidnapped in Nigeria.

Forecasts show a tropical depression, which may strengthen to become Tropical Storm Ernesto, will pass near Jamaica on Aug. 27 before heading for the Gulf, according to the U.S. National Hurricane Center. Three workers from a Eni SpA unit were kidnapped in Port Harcourt, Italian news agency ANSA reported. An Italian foreign ministry official confirmed the abduction.

“Any disruption on the supply side, however minor, is an immediate reaction to buy” oil futures, said Naohiro Niimura, head of commodity sales and research at Mizuho Corporate Bank Ltd. in Tokyo. “Moreover, demand is still robust right now.”

Crude oil for October delivery gained as much as 69 cents, or 1 percent, to $73.05 a barrel on the New York Mercantile Exchange. That was the highest intraday price since Aug. 16. The contract traded at $72.95 a barrel at 2:47 p.m. Singapore time in after-hours electronic trading.

Brent for October settlement rose as much as 60 cents, or 0.8 percent, to $73.28 a barrel on the London-based ICE Futures Exchange. It was at $73.25 at 2:48 p.m. Singapore time.

Port Harcourt is a city in the Niger delta, and home to the Nigerian headquarters of companies including Royal Dutch Shell Plc’s venture. Kidnappings and attacks on oil pipelines have cut output by as much as a third this year from Nigeria, Africa’s largest oil producer.

Bodyguard Killed

Armed men blocked the vehicle the three employees were traveling in near their office in a Port Harcourt suburb, and killed one bodyguard, ANSA reported. The three men work for Eni unit Saipem SpA, the report said.

More than 45 oil workers have been kidnapped this year in Nigeria. At least 17 were abducted in August alone in six separate incidents. Most of the abductions this month took place in Port Harcourt.

Increasing violence in the Niger delta has led Willbros Group Inc., an oil services company, which in February had nine of its employees kidnapped and later released, to announce plans to leave Nigeria.

BP Plc, Europe’s largest oil company by reserves, said yesterday it cut production at the biggest oilfield in the U.S. for a second time in less than a month because of a gas compressor breakdown.

Prudhoe Bay

BP halted 90,000 barrels a day in output at its Prudhoe Bay field in Alaska on Aug. 23, bringing production to 110,000 barrels a day, because of a mechanical fault in Gathering Center 2, Daren Beaudo, a BP spokesman, said by telephone yesterday.

On Aug. 7, BP said it was stopping all 400,000 barrels of production at Prudhoe Bay as a precaution because of corrosion in the pipes that feed oil to the Trans Alaska Pipeline. Crude oil prices jumped to a three-week high in New York that day.

BP, based in London, continued pumping oil from the western part of the field after winning regulatory approval to do so, keeping output at about half the field’s capacity. Prudhoe Bay accounted for 8 percent of U.S. output.

Crude oil also rose on concern that the United Nations may impose economic sanctions on Iran for uranium enrichment and disrupt supplies from the world’s fourth-largest oil-producer.

The Islamic republic on Aug. 22 said it is ready to hold “serious negotiations” on its nuclear program, a day after the country’s leader, Ayatollah Ali Khamenei, vowed he wouldn’t bow to UN demands to curtail any military effort.

Iran’s Response

Iran’s Supreme Security Council response to a European Union-led offer of incentives, didn’t mention whether the country will stop uranium enrichment. Halting enrichment is the main condition in the EU plan.

German Chancellor Angela Merkel said yesterday she isn’t satisfied with Iran’s response to the UN offer of economic benefits in exchange for curtailing its nuclear program. The U.S. and French governments on Aug. 23 said Iran’s response to the offer of economic benefits in exchange for curtailing its nuclear program falls short of the requirement of a uranium- enrichment halt.

The U.S. and several EU nations suspect Iran’s uranium enrichment is aimed at building a nuclear weapon. Iran says the fuel is needed to produce nuclear power.

To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at [email protected]

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