NEWS

[OPEC] The end of Organization of the Petroleum Exporting Countries / El Fin de la OPEP

2008-09-12T08:24:00.003+02:00

Saudi Arabia walked out on Organization of the Petroleum Exporting Countries yesterday, saying it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran. As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior Organization of the Petroleum Exporting Countries delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."

Organization of the Petroleum Exporting Countries will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to "oversupply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the United Sstates of America and European Union for a time. That political battle is only at its beginning.

The downward pressure on oil got a second hand. Brasil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by PETROBRAS has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.

Organization of the Petroleum Exporting Countries needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage. Organization of the Petroleum Exporting Countries has made no announcement about any possibility of dissolving, but the process is already over.

Source: MSNBC | MoneyCentral |by Douglas McIntyre

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[UNITED STATES] Crude oil surges $2 as Hurricane Ike delays production restart

2008-09-09T03:26:00.003+02:00

The price of crude oil surged more than $2 a barrel as the approach of Hurricane Ike delayed the restart of production from the Gulf of Mexico. Royal Dutch Shell evacuated workers from Gulf platforms or kept staff onshore who were moved from the path of Hurricane Gustav last month.

"We've already gone a full week and a half with production shut in from Hurricane Gustav," Stephen Schork, president of energy markets analysis firm Schork Group, told Bloomberg television. ''Now everything has to be shut down again for at least another week."

Crude oil for October delivery rose as much as $2.72, or 2.6pc, to $108.95 a barrel in after-hours trading in New York. In London, brent crude oil for October settlement rose as much as $2.57, or 2.5pc, to $106.66 a barrel. However, prices later eased to trade up 76 cents in London at $104.85 and up 51 cents in New York at $106.74.

Prices were also buoyed after the US government seized control of Fannie Mae and Freddie Mac, backers of about half the nation's home loans. The effective nationalisation of the troubled lenders put an end to the recent rally in the dollar as investors bought riskier currencies such as the Australian and New Zealand dollars. The deepening global slowdown has hit demand for oil, while the recent rally in the US currency has lessened oil's attractiveness as a dollar hedge. The oil price fell 8pc last week and is now sharply lower from the record $147 a barrel reached in early July.

The recent rise in prices may ease pressure from hard-line members of the OPEC oil producers' group, who have stepped up demands for a cut in production in a bid to keep crude above $100 a barrel.

At a key meeting of OPEC members tomorrow, Saudi Arabia will come under pressure to reverse output increases that Riyadh made earlier this year following intense lobbying by Washington.

Analysts say that the key decision OPEC must make at the meeting in Vienna is how to maximise revenues without choking off further demand in a worsening economic situation.

Companies operating in the Gulf of Mexico account for 26pc of US crude production and 14pc of natural-gas output.

Source: Telegraph

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[OIL PRODUCTION] OPEC-12 pumped an average of 32.77 million barrels per day (bpd) of crude oil in July

2008-08-14T20:53:00.001+02:00

An increase of 300,000 bpd on collective production. Platts, the world's leading provider of energy information, said in its latest report that the OPEC-12, excluding Iraq, exceeded their 29.673 million bpd target by 637,000 bpd. An increase in the daily production of 390,000 bpd by Saudi Arabia, Iran, Nigeria and Kuwait was said to be offset by shortfalls in Libyan and Iraqi outputs.

The biggest increase in OPEC production came from Saudi Arabia which increased output from 9.45 million bpd to 9.7 bpd as it had pledged to do. Nigeria increased its crude oil output by 100,000 bpd in July to an average of 1.9 million bpd.

Libyan output volume, which had declined in May and June because of repair work on Total’s al-Jurf field, decreased further in July after maintenance work commenced on the Waha-Defa oil pipeline.

Iraqi crude production was down by 30,000 bpd in July to 2.46 million bpd.

“It’s notable that suddenly, with output rising, OPEC officials are concerned about adherence to quotas and oversupply,” said Platts Global Director of Oil John Kingston.

“However, as we look toward the fourth quarter of the year, barring a more significant decline in demand, the world is going to need OPEC oil to avoid a larger inventory draw than is normal for the fourth quarter. Pulling inventories at that rate would be very bullish for prices.”

Source: PRESS TV

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[OPEC] Oil Falls to 7-Week Low as Organization of Petroleum Exporting Countries Output Climbs, Demand Weakens

2008-07-26T02:44:00.005+02:00

Crude oil fell to a seven-week low as a report showed that Organization of Petroleum Exporting Countries is bolstering output to cut prices and fuel consumption in the U.S. and Asia drops. The Organization of Petroleum Exporting Countries increased output by 200,000 barrels a day in July, according to preliminary estimates from PetroLogistics Ltd. Oil slipped more than $24 a barrel from the $147.27 record on July 11, as fuel use declined.

``The oil market over the last two weeks has begun to focus on the larger fundamentals, which are bearish,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Today's PetroLogistics report on OPEC output points to further increases in supply. The U.S. gasoline market is about as weak as I've ever seen during the summer months.''

Crude oil for September delivery fell $2.23, or 1.8 percent, to settle at $123.26 a barrel at 2:43 p.m. on the New York Mercantile Exchange, the lowest settlement price since June 4. The contract fell 4.8 percent this week.

Organization of Petroleum Exporting Countries will provide 32.9 million barrels a day this month, up 200,000 barrels from June, PetroLogistics founder Conrad Gerber said in an e-mail from Geneva. The 13-member group produces more than 40 percent of the world's oil.

Saudi Arabia, in response to calls from consuming nations, said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July to curb prices. The Saudis increased supplies to world markets to 9.45 million barrels a day this month, from 9.32 million a day in June, PetroLogistics said.

``The Saudis can produce more, but they can't sell it,'' Gerber said in a telephone interview. ``The demand's not there.''

Declining Demand
U.S. fuel demand averaged 19.9 million barrels a day last week, the lowest since January 2007, the Energy Department reported on July 23. U.S. gasoline consumption fell 3.3 percent from a year ago, the 13th consecutive weekly decline, a MasterCard Inc. report on July 22 showed.

Gasoline for August delivery fell 2.71 cents, or 0.9 percent, to $3.0323 a gallon in New York, the lowest settlement price since May 2. Futures reached a record $3.631 a gallon on July 11.

Pump prices are following changes in futures. Regular gasoline, averaged nationwide, fell 2 cents to $4.006 a gallon, AAA, the nation's largest motorist organization, said on its Web site. Pump prices reached a record $4.114 a gallon on July 17.

Asian Consumption
Record prices are also cutting fuel use in Asia, reports this week showed.

Japanese oil imports fell for the first time in nine months, the government said yesterday. South Korea consumed less fuel for the eighth straight month in June, state-run Korea National Oil Corp. said on July 22. The U.S., Japan and South Korea are the world's first, second and fifth biggest oil importers, according to the U.S. Energy Department.

``There's more concern about the economy seeping into the oil market,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.

New-home sales in the U.S. in June decreased 0.6 percent to an annualized 530,000 pace, from an upwardly revised 533,000 in May, the Commerce Department said today in Washington. A separate report showed orders for durable goods unexpectedly rose in June.

``The durable goods report was surprisingly strong, but that's just one number in a big constellation of bearish numbers,'' Mueller said. ``The housing sector is still very weak, and that's hurting the entire economy.''

Bookings for goods made to last several years gained 0.8 percent and posted the first consecutive monthly rise since July 2007, the Commerce Department said today in Washington.

Saving Energy
``Some of the spending on durable goods isn't bullish for energy,'' Evans said. ``If an airline is buying new, more efficient engines for its planes, that will count as a durable good but it will cut energy consumption. There are a lot of home improvements and equipment upgrades occurring that will cut energy demand.''

Pilots resumed guiding tankers and other deep-draft ships through Galveston Bay, site of the biggest U.S. petroleum port, after rough seas generated by Hurricane Dolly subsided, the U.S. Coast Guard said. Royal Dutch Shell Plc, Europe's biggest oil company, said it is sending personnel back to platforms in the Gulf of Mexico that were evacuated before Dolly's arrival.

Dolly, the first hurricane to hit the Gulf Coast this year, weakened to a tropical depression yesterday. It made landfall along the U.S.-Mexico border July 23 as a Category 2 hurricane. The storm's remnants were centered near the U.S.-Mexican border just south of the Big Bend region of Texas at 10 a.m. local time, the U.S. National Hurricane Center said.

Brent crude oil for September settlement declined $1.92, or 1.5 percent, to close at $124.52 a barrel on London's ICE Futures Europe exchange, the lowest settlement price since June 4.

Source: Bloomberg|By Mark Shenk

[GEOPOLITIC] Saudi Arabia - Russia. Saudis Coaxing Russia Away From Tehran

2008-07-17T09:49:00.001+02:00

Saudi Arabia has been working on weaning Russia away from Iran over the past year but is unlikely to have extracted a promise from Moscow that it will change its policy, diplomats said Wednesday. Earlier this week, Kommersant said U.S.-allied Riyadh offered to award Russia lucrative arms contracts if the Kremlin curtailed cooperation with Iran.

Prince Bandar bin Sultan, son of Crown Prince Sultan and former ambassador to Washington, met President Dmitry Medvedev and Prime Minister Vladimir Putin in Moscow on Monday.

Saudi television carried news of a landmark deal on military cooperation, following months of what diplomats in Riyadh say was quiet diplomacy as Prince Bandar frequently visited Moscow.

But a Russian government spokesman denied that the deal was linked to Iran, and diplomats say it is too early to determine whether Riyadh had won any concessions.

Many Western countries have tried to win defense and other contracts from Riyadh over the past two years, but few have actually come through. British and U.S. firms have secured the bulk of deals, worth billions of dollars.

"The speculation [in the media] is that this is a fundamental shift in strategy, but how realistic that is is hard to say," a diplomat in Riyadh said.

He said the kingdom might have showed "a degree of discomfort" at Russia's close ties with Iran but was unlikely to have asked directly for a change of policy.

Saudi Arabia, the world's top oil producer and a close U.S. ally, is wary of Shiite Iran's ambitions, and it shares Western concerns that Tehran is seeking to develop nuclear weapons. Iran says its nuclear program is peaceful.

Moscow is helping Tehran build its first nuclear power station and Putin visited both Tehran and Riyadh last year.

Source: The Moscow Times

[OIL PRICES] The UK´s Prime Minister, Gordon Brown clashes with oil nations over causes of price surge

2008-07-10T09:16:00.005+02:00

The last june 22, Gordon Brown today clashed with leading oil producing nations by insisting that fundamental market imbalances, rather than speculative pressures, were driving up oil prices and creating the world's third and worst oil shock.

Gordon Brown was in Jeddah at an unprecedented one-day oil summit of producers and consumers convened by Saudi Arabia, saying it was the duty of the world leaders to address the biggest crisis facing the world. Brown was the only major world leader to travel to the summit among the 35 nations attending the hastily convened conference.

Gordon Brown's analysis of the causes of record oil costs was at odds with the OPEC president, Chakib Khelil, who reiterated opposition to increased production by saying that "the price is disconnected from fundamentals" of supply and demand.

"We believe that the market is in equilibrium. The price is disconnected from fundamentals. It is not a problem of supply."

The Indian finance minister, Palaniappan Chidambaram, agreed. He said producers and consumers should "wrest control" of oil trading by agreeing to restrict prices.

"Surely demand and supply cannot explain what has happened over the last 12 months," Chidambaram said. "Oil prices were $70 a barrel in August 2007 and how is it that they've doubled when there has been no dramatic change in demand?"

But in the increasingly divisive debate on the cause of the quadrupling of oil prices since 2000, Brown has support from the US and least some OPEC members, notably Saudia Arabia, the largest oil producer. Under diplomatic pressure from America and Europe, Saudi Arabia increased production in May by 300,000 barrels a day, to 9.45m barrels a day. Oil minister Ali al-Naimi has said he will increase production by 2%, to 200,000 barrels a day, next month.

Brown addressed the conference with an offer of a long-term deal whereby the oil consuming nations will diversify energy supplies, moving into nuclear and renewables, and the oil producing countries will increase production, and invest some of its $3 trillion oil revenues in western renewable technologies.

In the short term, there was a clear need for extra oil production Gordon Brown said. In a speech to the conference he said "all of us need credible future commitments on increased oil supply because even with further action we propose to tackle climate change, demand for oil will continue to be strong over the medium term."

He claimed his new deal could bring an end to "the zero sum game between producers and consumers" from which no one benefits. He insisted the world has to address not just short term under-production of oil, but the long-term boom in demand likely to come from China and India, a surge that requires the west to look for new sources of secure energy.

He told reporters in Jeddah that over the next few years China will see car ownership grow from 37m to 100m, a further 100 airports will be constructed and 1,000 cities built.

He said: "Anyone looking at it knows there is more demand than supply, and it is the same if you look at future years due to the rise of China, India, Asia, and equally importantly, the rise in oil consumption in the oil producing countries from Nigeria to the Arab countries. So whatever the impact of speculative forces, the real issue, the concrete problem is how demand can be brought into supply with demand".

Brown said he was willing to examine the impact of speculation — billions of dollars in financial investments in oil by investors hedging against a weakening US dollar — but stressed it was not the predominant source of the crisis.

Stressing the severity of the crisis he said: "We have had the credit crunch, we have had food prices rising very fast, we have had a trebling of oil prices which is creating a huge amount of stress because of its effect on petrol, gas and electricity and the follow through to the rest of the economy. This is the third great oil shock in three decades, but this is the worst oil shock because of the severity of the rise in price, and the unpredictability and volatility in the markets."

In signs that Gordon Brown has made progress in putting himself in the vaguard of the international discussions on oil price, Gordon Brown disclosed that Britain will host the follow-up summit in London to build the shared anaylsis of what he described as the biggest problem of the world. The London meeting will probably be held in October.

The Saudi summit was seen as a high risk venture since if it fails to convince the markets there are fears that oil prices already pressing $140 a barrel will rise further this week. Light, sweet US crude oil futures closed at $134.62 on Friday, despite a 17% Chinese rise in petrol prices, the country's first rise since November.

Pointing to the fall in oil production in Nigeria prompted by sabotage at the weekend - predicted to cause a 120,000 barrels a day drop in production — Brown did not suggest that yesterday's summit itself will cause a short-term drop in the oil price.

That view was echoed at the conference by the chief executive of Royal Dutch Shell, Jeroen van der Veer. He said: "What I've heard so far are basically all good ideas, but it will probably not change the price tomorrow morning.

"The mood of the meeting is all about investment, that is the way to go. For investment we need fiscal stability and security."

Brown stressed his determination to balance the UK energy portfolio by a big expansion in nuclear and renewables, including plans to produce 15% of the UK's energy with renewables by 2020.

Gordon Brown steered clear of his recent more populist attacks on OPEC in deference to the Saudi decision to cooperate over the escalating high oil price. Instead he called for Gulf states to be given significantly more opportunities to recycle increased oil revenues — whether through sovereign wealth funds or directly into alternative energy investments in developed economies.

He said oil consuming economies should follow the UK lead that we in the UK have set by offering genuine openness and partnership in our investment markets to those operating under transparent commercial principles".

He said Britain was already involved in such discussions with the Abu Dhabi Investment Authority, the Qatari government and United Arab Emirates.

World production is currently just more than 80m barrels a day, an it is estimated there is at least 3m spare capacity.

Source: The Guardian|by Patrick Wintour

[SPAIN] Oil leaders meet again after Jeddah failure

2008-06-30T00:14:00.002+02:00

A week after failing to deflate record oil prices at a summit in Saudi Arabia, the world's biggest crude producers and consumers will get another chance to tackle the problem at a meeting this week.

More than 3,000 delegates, including leading corporate and political figures, are to meet at the 19th World Petroleum Congress (WPC) in Madrid, which runs from Monday to Thursday after an official opening reception on Sunday.

"It's the Olympics of the oil and gas industry," director of the World Petroleum Congress, Pierce Riemer, told a press conference last week.

The gathering follows a surge in oil prices Friday that took both New York light sweet crude and Brent North Sea crude to record levels beyond 142 dollars a barrel.

The president of the Organization of Petroleum Exporting Countries, the head of the International Energy Agency and ministers from Nigeria, Russia, Venezuela, India, France and the Netherlands are expected to be present.

They are to be joined by the bosses of major international oil groups ExxonMobil of the United States, CNOOC of China, Britain's BP and Shell, Rosneft of Russia and Total of France.

Saudi Arabia convened a hastily arranged meeting of consumers and producers in Jeddah last weekend to tackle the problem of record oil prices, which are forecast by Organization of Petroleum Exporting Countries,'s president to touch 150-170 in the coming months.

Most experts agreed afterwards that the only concrete result was Saudi Arabia's announcement that it would increase daily production by more than 200,000 barrels to 9.7 million -- and that it could significantly step this up if necessary.

The gathering pitted consumer nations, which are calling for an increase in production, against producers.

Most OPEC members remain firmly against any increase in their production and blame speculators and the fall in the dollar for the remarkable run up in prices, which have doubled in the last 12 months.

Jorge Segrelles, the head of the organising committee of the WPC, says the meeting is intended to be "a forum for actively finding solutions."

Given the differences in assessment of the situation between consumer and producer countries, the head of energy at consultancy Capgemini, Colette Lewiner, sees little chance of an agreement.

"There might be declarations of intent, but there will not be a consensus in the short term," she said.

The main event, which will take place in Madrid's Ifema conference centre, also faces competition from a rival meeting of environmentalists called to promote alternatives to crude oil as an energy source. The main event, which will take place in Madrid's Ifema conference centre, also faces competition from a rival meeting of environmentalists called to promote alternatives to crude oil as an energy source.

Source: Agence France Presse

[OIL PRICES] OPEC Leader Khelil Says Dollar Will Drive Oil to $170

2008-06-29T23:55:00.002+02:00

Organization of Petroleum Exporting Countries President Chakib Khelil predicted that the price of oil will climb to $170 a barrel before the end of the year, citing the dollar's decline and political conflicts.

``Oil prices are expected to reach $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro,'' Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria's oil minister.

Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.

Organization of Petroleum Exporting Countries ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. ``The market is completely supplied,'' Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.

The rising cost of crude is not linked to supply, Khelil said today. ``There is more than enough oil in the market to meet the international demand,'' added the Organization of Petroleum Exporting Countries president, who will take part June 30 in an international energy forum in Madrid.

Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.

Declining Dollar

``The decisions made by the U.S. Federal Reserve and the European Central Bank helped the devaluation of the dollar, which pushed up oil prices,'' Khelil said.

Oil may extend gains if the European Central Bank boosts rates on July 3, further weakening the U.S. currency. The dollar has declined 15 percent against the euro in 12 months.

European Central Bank President Jean-Claude Trichet reiterated June 25 that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from the credit crisis.

Source: Bloomberg|By Ahmed Rouaba

[SAUDI ARABIA] Asian workers rush to get Saudi oil oasis ready

2008-06-26T04:04:00.001+02:00

Deep in the Saudi desert, 28,000 Asian workers are racing to get a giant oil processing complex ready to help King Abdullah keep a vow to meet world demand for crude.

In a year's time, the Al Khurais field will be supplying 1.2 million barrels a day of Arab light crude to thirsty global markets, under a tight schedule set by Saudi Aramco. The king, and other top Saudi officials, promised at an oil summit they hosted in Jeddah on Sunday to increase current production by 200,000 barrels a day to 9.7 million barrels and to supply any further increase in global demand.

In temperatures that seldom fall under 100 degrees Fahrenheit during the day, workers from Indonesia, Bangladesh, India, the Philippines and other nations wear hoods against the sun as they finish the hundreds of kilometres of pipelines, three 600,000 barrel storage tanks, 15,000 horsepower pumps and a bomb proof control centre that make up the $10 billion complex.

Al Khurais is city-sized but can only be reached up a seemingly endless desert road, with truck tyres and carcases of burned out cars strewn along the sides and black camels roaming in the dunes.

The company calls it "the largest industrial project in the world." Together the three fields have estimated reserves of 27bn barrels and their joint daily production of 1.2m barrels will be more than OPEC's three smallest members Indonesia, Qatar and Ecuador, according to Aramco.

World demand is growing by about 1pc a year and Saudi Arabia has vowed to invest tens of billions of dollars to take production capacity to 12.5m barrels by the end of next year and eventually 15m if the demand is there.

Aramco vice-president for production Amin Al Nasser said 500,000 barrels a day will start coming out of its Khursaniyah field in August, and by the end of the year 250,000 barrels will be coming from the Shaybah field and 100,000 barrels a day from the Nuayyim field.

The Saudi firm has embarked on a huge operation to find new fields to add to its estimated 260 billion barrels of crude oil reserves.

Aramco research chief Muhammad Saggaf said that over the next 20 years the company's overall resource base could grow to 900bn barrels from the current level of 735m.

Source: Gulf Daily News

[NUCLEAR] Middle East nuclear renaissance?

2008-06-24T23:08:00.004+02:00

A comprehensive and well detailed report by the International Institute for Strategic Studies, released last week, sheds a pile of information on the state of nuclear proliferation in one of the world's most volatile regions -- the Middle East.

Indeed, as John Chipman, director general and chief executive of International Institute for Strategic Studies, points out in a publication entitled "Nuclear Programs in the Middle East: in the Shadow of Iran," the worrying factor lies in the sudden awakening of several Middle Eastern countries that, now feeling threatened by Iran, see the urge to jump onto the nuclear bandwagon.

"In the span of the 11 months between February 2006 and January 2007, at least 13 countries in the Middle East announced new or revived plans to pursue or explore civilian nuclear energy," said Chipman.

As the International Institute for Strategic Studies director pointed out, this sudden interest by Middle Eastern countries in nuclear energy is "remarkable" in view of the region's abundance of traditional energy sources -- such as natural gas and crude oil.

With the exception of Israel, in the rest of the region, from Morocco in North Africa to the southern tip of the Arabian peninsula, "There is not a single nuclear power plant in operation today," said Chipman.

The other exceptions are those being built in Iran -- the Bushehr facility being built with Russian assistance. It is this facility, as well as the gas-centrifuge plant at Natanz and the heavy water reactor at Arak, against which the Bush administration and the Israelis are threatening to take military action, unless Iran complies with the international community's request that it put a stop to its nuclear program.

These sites, and others scattered throughout Iran, were kept secret by the Islamic Republic and were revealed to the world by the Iranian resistance, the People's Mujahedin of Iran.

Past attempts by Arab countries to develop nuclear power plants have been thwarted before they could reach completion. Such was the case with the Osirak nuclear power plant that Saddam Hussein was hoping to build with French assistance, until the facility and his dreams were shattered in an Israeli air raid on June 7, 1981.

A more recent effort to develop nuclear capability was an attempt by Syria, allegedly with North Korean help, and it too was destroyed by Israel last September. Syria denies it was building a nuclear facility, but a high-ranking European diplomat told this reporter "there was no doubt Syria was building a facility to develop a nuclear program."

The danger stemming from Iran's pursuit of its nuclear ambition, besides the fact it could launch a regional conflict should Israel decide to take military action, is further amplified by the risk of nuclear proliferation throughout the region.

The International Institute for Strategic Studies report states, "Each of the new nuclear-aspirant states announced its decision in terms of electricity needs, energy diversification and the economic benefits of nuclear power." The reality, however, may be somewhat more macabre. As Chipman points out, "Promotion of nuclear energy is one way in which Sunni states are trying to counter the rising sense of Shia empowerment following the 2006 Lebanon war."

Such is the case in Egypt, where President Hosni Mubarak, and more specifically his son Gamal, are seizing upon nuclear power as a national project upon which to promote the son's campaign to succeed his father. Again Chipman: "If Tehran's nuclear program is unchecked, there is reason for concern that it could in time prompt a regional cascade of proliferation among Iran's neighbors."

Already, besides Egypt, Saudi Arabia and Turkey have voiced interest in going nuclear.

The good news, if one can be optimistic enough to find good among reports of numerous countries wanting to arm themselves with nuclear weapons, is that the danger of proliferation in the Middle East, says Chipman, "while real, is not imminent."

What appears to be playing out in the Middle East today is the positioning of the region's powers so they can, if they find the need to move ahead into the nuclear field, arrive there without additional delay. Saudi Arabia, for example, is unlikely to develop its own nuclear program but, as several reports have indicated, it would rely on a defense pact with nuclear-powered Pakistan.

Chipman predicts that over time the Islamic Republic's nuclear program could become a powerful regional proliferation driver. In other words, the result would be, on the one hand, a race between Sunni and Shia and, on the other, between the region's political powers -- that is, assuming the United States and/or Israel would refrain from intervening militarily.

Source: United Press International|by Claude Salhani

[OIL PRICES] Global Oil Summit Addresses Issues But Produces Few Solutions

2008-06-23T18:35:00.006+02:00

The global energy summit held to discuss rising oil prices explored leaders' different agendas and opinions but offered few concrete results. A summit held June 22 in Saudi Arabia to discuss spiraling oil prices concluded in an ambiguous fashion as attendees left the meeting with largely different opinions and agendas.

Although he blamed increased oil consumption and taxes on fuel, King Abdullah of Saudi Arabia used the meeting attended by leaders and ministers from 36 nations to blast speculators, claiming the spike in oil prices can be greatly attributed to their "selfish interests." With the current price of a barrel of oil now at a high of roughly 130 US dollars, he urged the summit participants to "rule out biased rumors" and to "reach the real causes for the increase in price."

Saudi Oil Minister Ali al –Nuaimi also used the summit in the Red Sea city to quell any fears about depleted oil reserves, claiming that there is enough crude to last "many decades." With Saudi oil output currently at 9.7 million barrels a day, Abdullah vowed to increase oil production should this become necessary. Kuwait and the United Arab Emirates similarly signaled their readiness to up production in the future.

Oil producers say production hike unnecessary

Other Organization of Petroleum Exporting Countries (OPEC) members such as Algeria and Venezuela, however, rejected this idea, as did Chakib Khelil, Organization of Petroleum Exporting Countries president and Algeria's Oil Minister. Khelil insisted that increasing production is unnecessary, stating that the 13-nation Organization of Petroleum Exporting Countries would only consider a production increase at a meeting in September. "We believe that the market is in equilibrium," he said. "The price is disconnected from fundamentals. It is not a problem of supply."

Glos calls for increase in production

German Economy Minister Michael Glos was one leader who had positive feedback to offer regarding the summit. "I view this conference as sending a clear signal to the oil market, which can contribute to an easing of the recent price developments," he said.

Glos also agreed with Abdullah that an increase in production is in order, claiming it would be "a strongly needed signal to the financial markets to not gamble any more on an increasing oil price."

US Energy Secretary Samuel Bodman echoed Glos' sentiments, warning that "in the absence of additional crude supply, for every one percent increase in demand we would expect a 20 percent increase in price in order to balance the market."

Referring to the staggering oil prices as "the biggest of all three oil shocks" in recent decades, British Prime Minister Gordon Brown called for an analysis of production shortages, as well as the speculation aspect cited by King Abdullah.

Brown however disagreed with the King's assessment of the causes for rising prices, pointing to the economic scenario of "oil demand rising faster than supply" as the root of the problem. Bodman similarly dismissed Abdullah's claim that higher prices are connected to speculation, stating that "there is no evidence we can find that speculators are driving future prices."

UK's Brown advocates nuclear as alternative to oil

Brown placed an emphasis on diplomacy as he called for a "new global deal" that would enable a "greater commonality of interest" between oil consumers and producers.

He also underlined the need for more investments in nuclear and renewable energy, calling for the construction of 100 new nuclear power plants and an additional 700,000 wind turbines worldwide by the year 2050.The price of a barrel of oil ten years ago was at ten US dollars.

Source: DW News

[OIL PRICES] Crude Oil Declines as China to Increase Fuel Prices Tomorrow

2008-06-19T18:21:00.003+02:00

Crude oil fell more than $4 a barrel on speculation demand will decline, after China said it will raise fuel prices starting tomorrow.

China, the second-biggest fuel consumer after the U.S., will increase gasoline and diesel prices by 1,000 yuan ($145.50) a ton, the National Development and Reform Commission said. The increases represent a 17 percent gain for gasoline and 18 percent for diesel. Oil has almost doubled in the past year, partially because of growing demand from China.

``The announcement of the Chinese fuel price increase sent the market sharply lower,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``This should have a big impact on demand.''

Crude oil for July delivery fell $4.10, or 3 percent, to $132.58 a barrel at 12:15 p.m. on the New York Mercantile Exchange. Futures climbed to a record $139.89 on June 16. Prices are 94 percent higher than a year ago.

Brent crude oil for August settlement declined $3.13, or 2.3 percent, to $133.31 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.

China will also raise jet-fuel prices by 1,500 yuan a ton, or 25 percent, tomorrow, the top policy planner said. On July 1, China will increase electricity prices by an average 0.025 yuan a kilowatt-hour, or 4.7 percent. China will impose temporary caps on thermo-coal prices until the end of this year.

The government is considering a so-called environmental tax, a new levy on auto fuels and changes to existing taxes on natural-resource use, Fu Jing, deputy director of policy and legislation at the State Administration of Taxation, said at the Energy Efficiency Asia conference in Beijing today.

Developing Countries
``The developing countries, in particular China, have been driving demand growth,'' said Eric Wittenauer, an analyst at Wachovia Securities in St. Louis. ``Subsidies and price caps insulate consumers from the full impact of higher prices. By rolling them back, some of the insulation is reduced and we can expect to see a demand response.''

Oil demand will fall 240,000 barrels to 48.71 million barrels a day among the 30-member Organization for Economic Cooperation and Development, the U.S. Energy Department said in a report on June 10. The OECD doesn't include developing countries such as China.

Chinese consumption is expected to rise 440,000 barrels to an average 8.02 million barrels a day this year, according to the report.

India, Malaysia, Indonesia and Taiwan have increased fuel prices and reduced subsidies this year, a move that may cut Asian demand and slow global oil-consumption growth.

Oil rallied for the first time in four days yesterday as U.S. President George W. Bush said he doesn't expect pledges of higher supplies to emerge from a June 22 meeting of producers and consumers in Jeddah, Saudi Arabia. Prices also rose because a government report showed that U.S. crude-oil inventories fell for a fifth week.

Source: Bloomberg|By Mark Shenk

[OIL PRICES] Markets ignore Saudi oil concession

2008-06-17T23:29:00.001+02:00

Saudi Arabia's offer of a further increase in production to halt the oil price spiral failed to have any impact yesterday on markets more preoccupied with the shutdown of a North Sea oil and gas field, the weakness of the dollar and the renewed surge in product prices.

Futures contracts in New York hit a new intra-day peak of $139.89 a barrel at one stage, before closing down 25 cents at $134.61, while North Sea Brent jumped more than $2.40 to $137.52 in London, on the back of the Statoil decision to cut output from the Oseberg field by 150,000 barrels a day follow

More on oil

Sterling jumped to its highest level for two weeks on a trade weighted basis in anticipation that the Bank of England's Monetary Policy Committee will be pressured into increasing interest rates because of inflation worries, while the dollar continued to lose ground against the euro.

Figures out today are expected to show consumer price inflation in Britain is running at an annual rate of 3.1pc, well above the 2pc target level agreed with government. Mervyn King, Governor of the Bank, will have to write what analysts feel will be first of a series of letters to the Chancellor explaining why the target has been missed.

Saudi Arabia's decision to increase production by another 500,000 barrels a day followed a meeting with Ban Ki-moon, the United Nations secretary-general, in Jeddah. The increase, the second in a month, will push Saudi output to 9.7m daily barrels and comes as Saudi prepares for a meeting of oil producers and consumer governments in Jeddah to try to put a brake on rising prices.

Malcolm Wicks, energy minister, welcomed the Saudi decision but failed to get the United Arab Emirates to follow suit.

Source: The Telegraph|By Roland Gribben

[OIL PRICES] Crude Oil Drops for a Third Day Amid Economic Slowdown Concern

2008-06-17T14:14:00.001+02:00

Crude oil declined for a third day amid concerns that slower economic growth will curb consumption of oil products.

Oil has retreated more than $7 from yesterday's record of $139.89 a barrel. German investor confidence dropped to the lowest in more than 15 years in June as surging inflation hit Europe's largest economy. The U.K. inflation rate rose to the highest since at least 1997 in May, paving the way for higher interest rates.

``Worries about economic inflation on both sides of the Atlantic are bearish for oil,'' said Rob Laughlin, senior broker at MF Global Ltd. in London.

Crude oil for July delivery fell as much as $2.11, or 1.6 percent, to $132.50 a barrel on the New York Mercantile Exchange and traded at $132.92 at 12:31 p.m. London time. Yesterday, the contract touched a record $139.89.

StatoilHydro ASA, Norway's largest oil and natural-gas producer, said its North Sea Oseberg field may resume operations this week after a fire on platform A halted production June 15.

Brent crude oil for August settlement was at $132.78 a barrel, $1.93 lower, on London's ICE Futures Europe Exchange at 11:29 a.m. local time. Prices reached a record $139.32 a barrel yesterday.

Saudi Arabia, hosting a forum in Jeddah this weekend to address the impact of record prices on importers, will raise output 200,000 barrels to 9.7 million barrels a day next month, King Abdullah told United Nations Secretary-General Ban Ki-Moon, according to a UN spokesman.

`Moving Supply'
``With the pressure OPEC has seen from the Western world that they need to respond, they've been taking the tack that demand is strong,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``That gives them a reason to start moving supply upward.''

The kingdom has called a meeting in Jeddah on June 22 to help stabilize prices. Crude oil fell 2.7 percent in New York last week as Saudi Oil Minister Ali al-Naimi described the surge in the commodity as ``unjustified'' and called a meeting of producers, major industrial nations and banks.

U.S. crude stockpiles probably dropped 1.5 million barrels in the week ended June 13 from 302.2 million barrels, according to a Bloomberg survey before tomorrow's Energy Department report. Gasoline stockpiles probably climbed 1 million barrels from 210.1 million barrels the prior week, according to the median of responses.

Source: Bloomberg|By Grant Smith

[OIL PRICES] Oil hits new all-time high

2008-06-16T16:13:00.003+02:00

The oil price spiralled to a new all-time high today of almost $140 a barrel after worse-than-expected manufacturing data for the world's biggest economy weakened the dollar.
A barrel of US crude for delivery in July hit $139.89 in US trading, breaking through the previous high of $139.12 set last week. The sharp rise startled traders, who had expected the promise of increase production from Saudi Arabia to keep a lid on the oil price.

Brent crude also hit a record high today, touching $139.32 a barrel. The jump was sparked by the latest New York State manufacturing index, which fell for the fourth time in five months. This pushed the US currency down against other major currencies, affecting the oil price, which is quoted in dollars. Oil has more than doubled in value in the last year, driven by rising demand, weakness in the dollar and traders betting that the price will keep rising. This has pushed up motoring costs for business and consumers, fuelling inflation fears.

This has caused blockades in Spain, and protests in South America and Indonesia. In the UK, drivers have also been hit by the ongoing strike action between Shell and hundreds of its drivers.

Saudi Arabia is OPEC's largest oil producer, and yesterday it tried to take some of the heat out of rising fuel prices with plans to increase production next month. The Saudi move followed a weekend of talks between the UN secretary general, Ban Ki-moon; the Saudi ruler, King Abdullah, and the country's oil minister Ali al-Naimi.

Source: The Guardian| by Graeme Wearden

[MIDDLE EAST] The Kingdom of Saudi Arabia may be getting nervous about the effects of high oil prices

2008-06-15T07:46:00.002+02:00

Saudi Arabia, the world's biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom's highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia. Saudi Arabia is currently pumping 9.5 million barrels a day, which is an increase of about 300,000 barrels from last month.

While they are reaping record profits, the Saudis are concerned that today's record prices might eventually dampen economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.

President Bush visited Saudi Arabia twice this year, pleading with King Abdullah to step up production. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher.

Last week, King Abdullah also took the unprecedented step of arranging on short notice a major gathering of oil producers and consumers to address the causes of the price rally. The meeting will be on June 22 in the Red Sea town of Jiddah.

Oil prices have gained 40 percent this year, rising to nearly $140 a barrel in recent days and driving gasoline costs in the United States above $4 a gallon.

Some analysts have predicted that prices could reach $200 a barrel this year as oil consumption continues to rise rapidly while supplies lag.

The growing volatility of the markets, including a record one-day gain of $10.75 a barrel last week, has persuaded the Saudis that they need to step in, analysts said.

Tony Fratto, a White House spokesman, said, "We would welcome any and all increases in oil production, including from Saudi Arabia."

But the measure carries some risks to the kingdom and is not guaranteed to bring down prices, analysts said. Some investors doubt that Saudi Arabia has the capacity to increase its production beyond its current levels.

"This clearly represents the biggest test for them," said John Kilduff, a senior vice president at the brokerage firm MF Global, who said the move could backfire if investors failed to respond to the extra Saudi supplies. No other producer has the capacity to quickly expand production.

Source: The New York Times |By Jad Mouawad

[GEOPOLITIC] Russia is biggest oil producer. International Energy Agency

2008-06-11T00:56:00.003+02:00

The International Energy Agency says Russia has turned into the biggest crude oil producer, a title traditionally belonged to Saudi Arabia.

The International Energy Agency declared on Tuesday that Russia has been the biggest crude oil producer in the first quarter of 2008, extracting 9.5 million barrels per day, ahead of Saudi Arabia at 9.2 million barrels, AFP reported. The International Energy Agency ranks the United States as the third-biggest producer with 5.1 million barrels per day, followed by Iran, pumping 4 million barrels per day

China is in fifth place with output of 3.8 million barrels per day. In principle, Russia's oil bonanza could continue for years: it has the world's seventh-biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm.

And oilmen reckon there are 100 billion more barrels to find--"the biggest exploration prize in the world", in the words of Robert Dudley, the boss of TNK-BP, BP's Russian joint venture.

Source: PressTV

[NOTH AMERICA] Environmental group worried about effects of production. Report decries oil sands waste

2008-06-06T11:58:00.003+02:00

Refinery expansions in the U.S. focused on processing crude from Canadian oil sands show an entrenched reliance on fossil fuels even as concerns grow about the effects of oil sands production, an environmental group said Wednesday. Such multibillion-dollar investments illustrate a long-term shift in refining toward so-called heavy oil, which requires more energy-intensive production and prompts worries about emissions and waste runoff, the report's authors said.

"The first step is to start with awareness of what it means," said Eric Schaeffer, a former Environmental Protection Agency lawyer who is director of the Washington-based Environmental Integrity Project, an advocacy group that produced the report.

"This is an intensely wasteful way to feed an oil habit," Schaeffer said.

Canada is the biggest exporter of oil to the U.S., sending more crude than Mexico, Venezuela and Saudi Arabia. And with an estimated 173 billion barrels of reserves, Canada's bounty is second only to Saudi Arabia's.

The oil sands now produce 1.3 million barrels a day, which could ramp up to 3 million barrels a day by 2015, according to the Canadian Association of Petroleum Producers.

More and more companies have jumped into the oil sands game as high oil prices have made its costly production economical. The world's five largest oil companies, as well as Canadian producers and some independent explorers and producers, have sands operations or joint ventures.

But as oil sands production has increased, so have concerns about increases in emissions and possible releases of toxic waste into waterways.

Emissions from oil sands production far exceed those from conventional crude production. Waste in some operations sits in so-called "tailing ponds" visible from space, the report said.

In late April, nearly 500 migrating ducks died after landing in a Syncrude Canada tailing pond. Such ponds are required to have noise devices to scare off birds, but Syncrude's devices weren't working in the aftermath of a snowstorm. The Canadian government is investigating.

Schaeffer acknowledged that pushing to cease oil sands production isn't practical.

The report noted that refinery expansions and new construction are long-term investments, indicating that the U.S. intends to receive and refine Canadian crude for many years to come.

So instead of recommending an end to production and refining of oil sand crude, the report calls for the U.S. to reduce oil consumption by improving efficiency standards for vehicles; raise emissions control standards; consider alternatives to oil derived from the sands in Clean Air Act reviews of proposals for refinery expansion and construction; and account for sulfur, nitrogen, and other impurities in heavy oil when issuing construction permits.

Expansions are expected to add 800,000 barrels a day of refining capacity by 2011, according to the American Petroleum Institute.

A new refinery hasn't been built in the U.S. since 1976. A proposal to build one is under consideration in Arizona. Another proposal for a plant was approved this week by voters in Union County in South Dakota.

Bill Holbrook, spokesman for the National Petrochemical & Refiners Association, said 22 expansion projects are ongoing, though not all are related to adding Canadian oil capacity.

Cindy Schild, manager of refinery issues for the American Petroleum Institute, said Canada is stable, friendly and open to outside producers. It stands apart from resource-rich countries like Venezuela or Russia that have squeezed access, or ones in the Middle East and West Africa that are vulnerable to geopolitical tensions or civil violence.

"We view the Canadian oil sands as a reliable source of energy," she said.

She added that refiners have little choice but to revamp plants to handle heavy oil like that produced in Canada and other countries, including Venezuela. Heavy oil contains more impurities than light, sweet crude from the Middle East, and requires more complicated processing to turn it into gasoline and other fuels.

Also, Schild said, if U.S. refineries eschew Canadian oil, China and other energy-hungry emerging countries will take it.

"Do you want it to be processed in a country with standards in place to address environmental impacts maybe more stringently than others? It's going somewhere," she said.

Source: Houston Chronicle|By KRISTEN HAYS