BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Wednesday, 4 April, 2001, 16:19 GMT 17:19 UK
Oil rises on petrol shortage fears
Opec meeting
Action has been taken against Opec by a US court
Crude oil has gained more than a dollar a barrel in the last 24 hours of trade because of worries about a supply crunch of petrol in the US.

The rise was fuelled by new data revealing that petrol stocks in the US sank for the sixth week in a row.

People are finding out there is not enough [petrol] around

Tom Bentz
BNP Paribas
National inventories are now ten million barrels below the levels at this time last year when supply proved inadequate to meet peak consumption during the summer.

This has provoked a surge of buying of crude oil - and the subsequent price rise - in a rush to refine out more petrol and top up stocks.

The news coincides with a bizarre court ruling in the US which forbids the oil cartel Opec from price fixing.

Supply crunch

The petrol-guzzling US increases its consumption between 31 May and 1 September, when many Americans drive to their holiday destinations.

Americans hit the road during the holiday season
The lack of stored petrol, ahead of this boom period, is causing the markets to fear that supplies could run out.

Last summer a similar situation sent crude prices soaring.

"We've been behind the curve in making summer gasoline all along, and now we're heading into the season, people are finding out there is not enough around," said Tom Bentz of BNP Paribas.

Increases in the crude oil price feed through to both individual drivers and service station operators.

Futile gesture?

High prices caused angry service station owners in Alabama to embark on a civil lawsuit, accusing Opec of conspiring to fix oil prices through limiting oil supply.

Saudi Arabia oil minister Ali al-Nuaimi
Opec did not respond to the US court
The accusations were not hard to prove since Opec openly exists - and was created - for that very reason.

The court ruled in the favour of the cash-strapped service station, granting a one-year injunction barring Opec form fixing prices.

Opec received copies of the lawsuit at its headquarters in Vienna, Austria but court records show that the organisation chose not to respond.

It seems unlikely that Opec, which includes extremely rich and powerful nations such as Saudi Arabia, will bow to the ruling of a local US court.

And international lawyers say that the judge's order is virtually unenforceable in any case and really only a futile gesture.

Downward trend

Despite Wednesday's rise in oil prices, the wider trend is a downward one, with the economic slowdown weakening oil demand.

Oil prices have fallen almost 30% since touching a 10-year high above $35 a barrel late last year.

Opec exists to try and ensure that the key oil exporting countries do not flood the market with oil. They fear that this might lead to prices falling below the $10 reached in 1998.

At 1414 GMT, May Brent futures were up 46 cents a barrel at $25.23, after heavier gains earlier in the day.

Search BBC News Online

Advanced search options
Launch console
See also:

09 Mar 01 | Middle East
Iran prospects for Caspian oil
20 Feb 01 | Business
Oil price dips on sanctions talks
09 Feb 01 | Business
Oil climbs over $30 a barrel
24 Oct 00 | Business
Profits surge at oil companies
10 Oct 00 | Business
Oil demand warning
18 Oct 00 | Business
Only in the oil market...
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories