CAIRO, 23 March 2003 — Petroleum shipments from the Gulf were unaffected yesterday despite reports of blazing wells in Iraq’s southern oil fields, shipping sources said.
“From Kuwait to Suez, it’s smooth and steady,” said a London-based shipping executive. Officials in Gulf states reported terminals and refineries were functioning normally across the region, despite an Iraqi missile attack late Thursday that appeared to be aimed at Kuwait’s Shuaiba refinery.
The chief of the British armed forces, Admiral Sir Michael Boyce, said yesterday in London that nine oil wells were on fire and that most of Iraq’s oil and gas installations had been mined or booby-trapped.
Iraq, however, has denied torching its wells, and said trenches filled with oil had been set alight to reduce visibility and slow the advance of American and British troops.
“Anyway, it cannot be compared to the planned sabotaging of Kuwaiti fields in the 1991 Gulf war,” said a Gulf oil official.
Southern Iraq accounted for around half of the country’s oil exports until they were halted days before the onset of the war on Thursday.
The main fields around Basra are Zubair, Rumaila, Safwan and Nahr Umar, connected by pipeline to the terminals of Mina Al-Bakr and Khor Al-Amaya, off the Fao peninsula.
Although oil transit through the Strait of Hormuz continued undisturbed on the third day of military action and the Iraqi threat to shipping lanes has decreased, premiums on tankers remained high.
“The threat does not come from Iraq only, you can’t exclude possible terrorist acts,” said an insurer, recalling last year’s attack on a French tanker off the Yemeni coast.
War developments, however, continued to favor a bear market. Crude oil prices have lost more than $10 since they peaked last month over concerns about a war.
New York’s benchmark light sweet crude for May delivery skidded $1.21 to $26.91 a barrel Friday, marking a slump from last month’s peak of $39.99 to the lowest level this year. Despite the loss of 1.5 million to 2 million barrels per day of Iraqi crude, analysts say the market looks oversupplied because of lower seasonal demand in the northern hemisphere, and because production in Venezuela was nearing recovery.
Except for Saudi Arabia, oil exporters were all producing at maximum capacity ahead of the war to appease the market, and expert say global supply now overweighs total demand by around 300,000 barrels per day.
The oil situation is nevertheless still unstable. “War is not over yet, it can go nasty, and Nigeria is now posing a problem,” said an expert.
US oil giant ChevronTexaco said Friday it had suspended all production in the western Niger Delta because of a violent ethnic uprising, slashing output by 140,000 bpd.
Nigeria is Africa’s largest oil producer, with an OPEC production quota of 2.018 million barrels per day. The International Energy Agency lists it as the world’s sixth largest oil exporter.
