Oil worries extend beyond Libya and Syria
Conversations surrounding last week's oil markets centered on Libyan production issues and the possibility that U.S. military strikes on Syria may have broader implications for crude oil, Graeber writes.
Sabotage and theft from oil producing regions in Nigeria has left a black mark on the nation's economy. Oil production is down more than 7 percent this year, bringing the economy along with it. Last week, Royal Dutch Shell announced it entered into talks with Nigerian villagers who said their lives were changed for the worse because of the company's pipeline spills. While that may offer some relief for the Niger Delta, the death of at least 20 people at the hands of Islamic militants suggests it's still no place to do business.Skip to next paragraph
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Conversations surrounding last week's oil markets centered on Libyan production issues and the possibility that U.S. military strikes on Syria may have broader implications for crude. Brent crude oil prices for last week hovered above the $115 per barrel mark. In April, Libya was still producing around 1.4 million barrels of oil per day, long before there were any serious concerns about military action in Syria. Nigeria's Bonny Light crude oil grade, however, has been under force majeure ever since. Though Libya's near-term oil prospects are dwindling, Nigerian production isn't exactly on the rebound. (Related article: Looking for the Next Mega Oil Play)
Last month, shipping information showed Nigeria was set to export 95,000 barrels of Bonny Light per day in October, down 24 percent from what's planned for September. Crude oil output for the second quarter, meanwhile, was down more than 7 percent from the first quarter to average 2.11 million bpd. That's left Nigeria with something of a black eye. OPEC said oil provides Nigeria with 20 percent of its gross domestic product, but 95 percent of its foreign exchange earnings and more than 60 percent of its budgetary revenues. Nigeria's oil wealth is in part the reason why it's Africa's second largest economy, but its economy is slowing down. The country's National Bureau of Statistics said last week the economy grew 6.18 percent during the second quarter when compared to the same time last year. That's nearly 5.8 percent slower than the first quarter. The decline is largely due to the drop in oil output because of theft and pipeline shutdowns.