Strikes Keep Oil Prices Up

Strikes Keep Oil Prices Up

Labor actions that cut crude supplies from the North Sea and Nigeria helped keep oil prices up around $120 a barrel. BP PLC on Sunday shut down the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. because of a 48-hour walkout by employees in a pension dispute at a refinery in central Scotland.

Workers will return to the Grangemouth refinery Tuesday, their union said. But the union also said further industrial action is possible unless refinery owner Ineos backs down.

Representatives of ExxonMobil Corp. met with striking white-collar workers who have shut down oil production at the company’s operations in Nigeria.

The strike began late last week, and the company said oil output was affected, although it’s not clear by how much. ExxonMobil notified clients it may not be able to meet contractual obligations for oil.

A company spokesman said reports suggesting that the company’s entire 800,000 or so barrel per day production was locked in were “unverifiable.” He said oil was still being pumped from one area.

The strikers are demanding better pay and benefits. Nigeria is a major provider of oil to the U.S., shipping over a million barrels a day.

“Present disruptions, with the exception of the ongoing Nigeria civil strife, are not expected to be of long duration,” said Platts Chief Economist Larry G. Chorn. “Hence prices are expected to return to the $110 to $115 range over the next few days. There are adequate inventories in place to offset temporary production shortfalls.

“That being said, the global supply capacity is very tight with approximately an additional one million barrels of OPEC per day available within a 30-day window and no non-OPEC volumes available,” Chorn said.

Share this post