The Atlantic Richfield Company has notified the Nigerian government that it is ending two oil supply contracts covering delivery of 60,000 barrels of crude a day effective May 7 and 10, the Wall Street Journal reports. The move marks the first time in recent years that an oil company has willingly relinquished a guaranteed source of oil, observers said.
Arco's decision reflects the current world oil glut, generally assumed to be caused by Saudi Arabia's high production levels, which is pressuring members of the Organization of Petroleum Exporting countries to lower their prices. And some sources see it as the strongest indication so far that Saudi Arabia is succeeding in forcing its political will on OPEC. The Saudis want the cartel to accept a long-term pricing strategy.