The Oil and the Glory

The next oil crisis point

Nigeria is about to become the crisis du jour, and there is good reason — Goodluck Jonathan (pictured above) is running for re-election as president this month; so are candidates for Parliament. In the last elections — in 2007 — there was so much violence that 1 million barrels of oil a day — half ...

Pius Utomi Ekepi   AFP/Getty Images
Pius Utomi Ekepi AFP/Getty Images

Nigeria is about to become the crisis du jour, and there is good reason — Goodluck Jonathan (pictured above) is running for re-election as president this month; so are candidates for Parliament. In the last elections — in 2007 — there was so much violence that 1 million barrels of oil a day — half the country’s total production — was lost to export markets, the Wall Street Journal’s Jerry Dicolo reports. If that recurs — or if traders figure it will — look for prices to go a lot higher than the $107.94 a barrel that they reached last week. Along with that will rise gasoline prices.

There is a chance that matters will not turn bad. The Movement for the Emancipation of the Niger Delta, or MEND, the most active militant group operating in the oil-rich Niger Delta, has retracted a threat to attack oil installations during the election period, according to local on-line The Nation. Authorities are better-prepared for what trouble does arise, reports Agence France Press. "There will be pockets of violence," Victor Ndukauba, an analyst with Afrinvest Advisers, told the French agency. "However, there is much better awareness of a lot of the [militant] foot soldiers. … There will be violence, but we don’t think it will be as bad." Some analysts actually think that the country will increase production in the coming weeks and months by some 300,000 barrels a day.

The parliamentary elections are Saturday, and the presidential voting on April 16.

But if there is trouble as in the past, this time — unlike with the loss of Libya’s 1.1 million barrels in daily exports — the United States would be directly affected. That is because the United States currently buys some 960,000 barrels of oil a day from Nigeria. Oil prices would go up for everyone, but the U.S. will have to directly make up the volumes this time from elsewhere.

Bloomberg reports that Nigeria is already figuring into the futures market — when they opened in Australian this morning, and in before-hours trading in New York, the price of the New York-traded benchmark, called WTI, rose to $108.74 a barrel. The other major crude — London-traded Brent — was up to $119.48, which is 0.7 percent higher than its close at $118.70 on Friday.

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