Crude oil may rise in London today after an attack on a terminal operated by Royal Dutch Shell Plc cut Nigeria's exports by almost 20 percent.
Shell closed the Forcados oil port in the Niger Delta on Saturday, halting shipments from the 400,000 barrel a day terminal. Militants also took nine foreign workers hostage and attacked two pipelines. Oil surged in New York on Friday on concern that output in Africa's top producer may be cut.
"Nigeria is becoming a chronic problem for the oil market," said Tony Nunan, assistant general manager of petroleum business at Mitsubishi Corp in Tokyo. "Brent crude oil is going shoot up in London tomorrow."
Brent crude oil for April delivery rose US$1.10, or 1.9 percent, to close at US$59.89 a barrel on Friday on London's ICE Futures exchange. Electronic trading in Brent crude oil starts at 9am Singapore time today. The New York Mercantile Exchange, the world's largest energy futures market, is closed today for a public holiday.
Crude oil for March delivery rose 2.4 percent to US$59.88 a barrel in New York on Friday, its largest gain this month, after the BBC reported that the Movement for the Emancipation of the Niger Delta planned to declare "total war" on foreign oil companies. Almost all oil production in Nigeria, which exports 2 million barrels a day, is in the delta.
Oil prices have tripled since 2001 as global oil demand, led by the US and China, has risen faster than supply.
Militants seized the nine foreign oil workers, including three US citizens, from a Shell-contracted boat on Saturday morning. The hostages worked for oil services company Willbros Group Inc, the Panama City-based company said in statement.
"The market is very vulnerable to a supply shock like this," said David Thurtell, a commodities analyst at Commonwealth Bank of Australia in Sydney. "This news will push up prices when trading starts tomorrow."
No loading will take place at the Forcados terminal this weekend, Shell spokeswoman Caroline Wittgen said on Saturday.
Shell has evacuated workers from its offshore EA field, cutting production by 115,000 barrels a day, Wittgen said.
The evacuation is a "precautionary measure in light of recent events in the Niger Delta," she said.
Nigeria, which is the fifth-biggest supplier to the US, produces low-sulfur, or sweet, crude oil, prized by refiners for the proportion of high-value gasoline it yields. Shell, based in The Hague and the world's third-biggest oil company, produces about half of Nigeria's output.
The Niger Delta movement has targeted Shell installations after alleging the company allowed an airstrip it operates to be used for a Nigerian Air Force helicopter attack on villagers in the region. Shell said it could neither confirm nor deny the field had been used. The Nigerian government said the helicopters were used to disable barges engaged in oil smuggling.
"All pipelines, flow stations and crude loading platforms will be targeted for destruction," Jomo Gbomo, a self-described spokesman for the rebels said on Saturday. "This impromptu action is a direct consequence of the helicopter attacks on several communities in the region."
Communities in the Niger Delta, a maze of creeks and rivers feeding into one of the world's biggest remaining areas of mangroves, are among Nigeria's poorest, a Shell-funded report on the area said in 2004.
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