Oil Prices up on Word
US Ship Fired on Boats in Persian Gulf
Attack in Nigeria
JOHN WILEN / AP 25apr2008
NEW YORK — Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon. Crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. A Navy spokeswoman said the origin of the boats was unclear.
The news was enough to send light, sweet crude for June delivery up to $119.55 before the contract retreated to settle up $2.46 at $118.52 a barrel on the New York Mercantile Exchange.
The incident worried investors because at first it appeared to be the latest in a series of encounters between U.S. forces and Iranian boats in the Gulf. Early this month, the USS Typhoon fired a flare at an Iranian boat that came within about 200 yards of the ship. In January, several Iranian boats made what the Navy described as provocative moves near a U.S. ship in the Strait of Hormuz. And in December the USS Whidbey Island fired warning shots at a small Iranian boat officials said was rapidly approaching the ship.
On Friday, oil prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.
In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details.
Earlier this week, Shell said an earlier attack cut its Nigerian oil production by about 170,000 barrels a day.
Separately, workers at an ExxonMobil Corp. joint venture in Nigeria cut production by an unspecified amount to demand more pay.
Adding to the supply concerns, BP PLC said it will shut down a 700,000 barrel-a-day pipeline system that carries oil from the North Sea to refineries in the U.K. on Saturday in anticipation of a strike at Scotland's Grangemouth refinery expected to begin Sunday. The refinery supplies power and steam to the pipeline; if it shuts down, the pipeline can't operate.
Oil's rise came as the dollar strengthened. A stronger dollar typically encourages selling by making commodities such as oil less effective hedges against inflation, and by making oil more expensive to overseas investors. Analysts say the dollar's steady decline over the past year is the chief culprit behind this year's rapid rise in oil prices.
But, noted Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., "that connection between oil and the dollar can be broken easily by supply issues," which drove trading on Friday.
At the pump, meanwhile, gas prices rose another 2.1 cents Friday to a record national average of $3.577 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been following oil futures higher, but are also rising due to concerns about whether gasoline supplies are adequate to meet peak summer driving demand.
Analysts expect gas prices to continue rising for at least another month to $3.70 to $4 a gallon. To a large extent, how high gas prices peak depends on what oil does.
Lately, analysts have recently raised their oil price predictions to $125 to $130 a barrel. Earlier this week, the expiring May crude contract rose as high as $119.90 as investors scrambled to square positions.
However, the Federal Reserve is expected to cut interest rates less sharply next week than originally thought. Because rate cuts tend to weaken the dollar, a smaller than expected cut could push the dollar higher, and send oil prices down.
In other Nymex trading Friday, May gasoline futures rose 3.51 cents to settle at $3.0537 a gallon after earlier rising to a new trading record of $3.0815, and May heating oil futures rose 4.45 cents to settle at $3.3028 a gallon. May natural gas futures rose 17.3 cents to settle at $10.963 per 1,000 cubic feet.
In London, Brent crude futures rose $2 to settle at $116.34 a barrel on the ICE Futures exchange.
Associated Press writers Lolita C. Baldor in Washington, Sebastian Abbot in Cairo, Egypt, Edward Harris in Lagos, Nigeria, and Gillian Wong in Singapore contributed to this report.
Dear Mr. President,
On Monday, April 21, 2008 at 0100 and 0310 Hrs commandos from the Movement for the Emancipation of the Niger Delta (MEND) in continuation of Operation Cyclone ( the crippling of the Nigerian oil export industry) attacked two major oil pipelines in Rivers state of Nigeria located at Isaka River and Abonnema River (close to Idama flow station). The pipelines may belong to Shell and Chevron .
Today's attack was prompted by the continuous injustice in the Niger Delta region of Nigeria where the root issues have not been addressed by the illegal and insincere government of Umaru Yar'Adua and Goodluck Jonathan. It also dispels the false impression that peace and security have been restored in order to gain the confidence of potential investors in the oil and gas sector; to protest the continuous detention and secret trial of Henry Okah who was taken hostage during a supposed truce and who must be a key participant in any on-going peace process to make it acceptable to us. Then finally, to show our way of saying "welcome" to the US Naval warship, USS Swift which is transiting the Gulf of Guinea.
In our first open letter to you dated February 17, 2008 which remains valid and another dated January 19, 2008 to Actor George Clooney, a UN Messenger for Peace, MEND expressed its willingness to embrace a genuine and transparent peace program without getting any response. The ripple effect of this attack will touch your economy and people one way or the other and hope we now have your attention.
Mr president, your warships do not intimidate us. Instead they only embolden our resolve in fighting the Goliaths of the world that support injustice. Do you consider the over 4,000 precious lives of your compatriots wasted in that senseless war in Iraq? You have meddled negatively in other countries using false excuses and information in deceiving a gullible American public.
It was your country that once backed a blood thirsty despot called Mobuto and conspired in killing the visionary Lumumba. Now you are repeating the same evil in the Niger Delta and the gulf of Guinea. You dined with Olusegun Obasanjo, who not only committed genocide against the people of Odi, in Bayelsa state but is being discovered as the biggest thief in the history of Nigeria. In your God fearing heart, you know the truth concerning the fraudulent electoral process that has ascended Yar'Adua and his deputy to the presidency, yet your country looked the other way.
We have nothing to loose because he that is down need fear no fall. Our waters and farms have been polluted by oil companies with double standards. Our girls are raped by soldiers of the Nigerian army with impunity and protesting youths are assaulted and killed daily. Even journalists from your country can not visit the region to report the truth without being arrested and embarrassed.
MEND is prepared for talks and will prefer Ex President Jimmy Carter to mediate. Mr carter is not in denial as the rest of you who brand freedom fighters as terrorists, forgetting their integral role in any sustainable peace process just as he has demonstrated in his meeting with Hamas.
If the root issues such as the control of our resources continues to be swept under the carpet, and the governments deception of the Niger Delta people continues; including holding sons of the Niger Delta hostage in Northern Nigeria, then, like Otto von Bismarck once remarked, "the great questions of the time will be decided, not by speeches and resolutions, but by iron and blood".