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March 24, 2003
 
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(AP Photo)
Oil Prices Up on Fear of Longer Iraq War
Crude Oil Prices Jump on Fear of Longer Iraq War, Nigeria Unrest

The Associated Press


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LONDON March 24

Oil prices surged Monday on market fears the Iraq war might take longer than some anticipated and because ethnic unrest was disrupting supplies from Nigeria.

Stiffening resistance to the U.S.-led invasion of Iraq has undercut hopes for a brief war and an early rehabilitation of that country's oil industry. Iraq pumped 2.5 million barrels a day before fighting began and typically exported about 80 percent of that, or 2 million barrels.

May contracts of North Sea Brent, Europe's benchmark crude, jumped $1.39 a barrel to $25.74 in afternoon trading in London. Contracts of U.S. light, sweet crude for May delivery were trading $1.24 higher at $28.15 a barrel in New York.

Fighting around burning oil wells in southern Iraq's Rumeila field has driven out civilian oil-fire specialists working to quell the blazes, the top firefighter said. U.S.-led forces previously believed the field's facilities were secure.

"It's not nearly as safe as they said it was," Brian Krause, vice president and senior blowout specialist for Houston-based Boots and Coots, said Monday in Kuwait. "We're kind of sitting ducks out there."

Coalition forces have made a priority of securing Iraqi oil installations to prevent sabotage by Iraqis.

Confusion persisted over the extent of any Iraqi plans to damage or destroy southern oil facilities. British military sources said last week that almost all Iraqi oil facilities were mined or booby-trapped, indicating that Saddam Hussein was prepared to blow up his entire economy.

The Iraqi newspaper Al-Thawrah said on its Web site Sunday that was a lie.

"What is burning in that area is no more than artificial trenches filled with oil to be used as obvious methods of defense," the paper said.

Iraqis sometimes have ignited oil in trenches to create thick smoke to confuse their attackers.

U.S. Brig. Gen. Vince Brooks said Saturday that only nine wells in southern Iraq had been sabotaged. Iraq has 1,685 producing wells.

"I don't think that the Iraqis ever really intended to blow these wells up and keep them burning forever," said Rob Laughlin, managing director of London brokerage GNI Man Financial.

Still, he blamed fears of an "elongating" war for causing much of the market's jitters.

Another cause for market concern was social unrest in Nigeria that has forced oil companies there to suspend at least 40 percent of the country's production.

Shell Development Petroleum Co., a unit of Royal Dutch/Shell in Nigeria, has shut down 370,000 barrels a day in crude output after evacuating facilities in the oil-rich Niger River delta, company spokeswoman Kate Hill said Monday.

ChevronTexaco on Sunday evacuated staff and shut practically all of its installations in the area, suspending production of 440,000 barrels a day.

The Niger delta has suffered civil unrest between rival ethnic Ijaw and Itsekiri communities ahead of April's parliamentary and presidential elections. Nigeria, which normally pumps about 2 million barrels a day, now has lost more than 800,000 barrels in daily production due to weeks of fighting.


photo credit and caption:
A U.S. military convoy passes burning oil pipelines heading toward Baghdad, near the southern Iraqi city of Basra, Saturday, March 22, 2003. American and British troops encountered little resistance as they seized Iraq's only port city Umm Qasr and moved to secure oil fields. (AP Photo/Laurent Rebours)

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

 
 
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