- The Washington Times - Monday, March 24, 2003

LOS ANGELES, March 24 (UPI) — Crude prices soared nearly $2 per barrel Monday after traders returned to work after a tense weekend during which American and British troops ran into stiffening resistance in Iraq and political upheaval cut into crude production in Nigeria.

While coalition commanders declared they had secured Iraq's coveted Rumailah oilfield, traders on the New York Mercantile Exchange were taking a closer look at the flare-up in Nigeria and the possibility the world may not be as flush with oil this spring as they had expected.

May crude settled at $28.66 per barrel on the New York Mercantile Exchange, up $1.75 from Friday's settlement. May crude was also up more than $1 on London's International Petroleum Exchange. NYMEX volumes were considered light, which can exaggerate price moves as refiners scramble to cover their Nigerian supplies with oil from other sources.

Gen. Tommy Franks, the American commander of the Iraqi campaign, reassured reporters Monday that the overall operation was progressing more-or-less as planned despite high-profile casualties suffered by coalition troops in clashes with Iraqi soldiers who refused to surrender and guerrillas who could pose a threat to vital logistics routes.

"Our forces are continuing to move," said Franks. "They are moving in ways and to places that we believe are just exactly right, in accordance with a plan that is designed to be flexible."

Franks said the Rumailah field had been "secured" by the invading forces as was port of Umm Qasr, one of Iraq's few direct outlets to the Persian Gulf.

While the successes set the stage for an eventual resumption of Iraqi oil exports, the market's near-term prospects were complicated by production cuts in other areas of the Gulf and in Nigeria, where ChevronTexaco and TotalFinaElf had evacuated some of their production facilities in the oil-rich Niger Delta due to ethnic and political violence amongst the locals. A third company, Shell, said last week it could not guarantee smooth operations at two of its tanker terminals.

"Local militants in the Niger Delta region have reportedly taken control of a number of pipeline flow stations and threatened to destroy them," the U.S. Energy Information Administration said Monday. "Thus far, the total amount of production disrupted by these actions is in the range of 600,000 to 800,000 barrels per day."

A Nigerian army spokesman said Monday that troops were actively bringing the delta region back under government control, according to the British Broadcasting Corp.

Nigeria is the seventh-leading supplier of crude to the U.S. market, the EIA said, and also supplies oil to Europe, Asia and India.


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