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Last Updated: Monday, 27 September, 2004, 22:13 GMT 23:13 UK
World oil prices hit new highs
Oil refinery in Saudi Arabia
Opec says it is already pumping flat out
World oil prices broke fresh records on Monday, with US light crude poised to break through the $50 a barrel mark, and Brent crude topping $46 in London.

US light crude closed at a record price of $49.64 and in post-market electronic trading, struck $50 a barrel.

Brent crude hit a high of $46.28 before closing 57 cents up at $45.90 as instability in Nigeria's main oil producing region stoked supply worries.

Analysts said US prices would soon top $50 a barrel for the first time.

'Major problem'

Oil traders said fears that political unrest in Nigeria's oil producing region would cut output had added to pressure on prices.

The hits just keep on coming
John Kilduff, energy analyst
Shell and Agip have both evacuated non-essential workers from the south Nigerian Delta in recent days where the government is fighting insurgents.

"The problems of Nigeria have obviously got worse," said Robert Laughlin, a trader at GNI-Man Financial.

"This is a major problem that we don't need because they produce sweet crude oil. There is not enough sweet crude oil."

Traders also cited recent clashes between Saudi Arabian police and suspected Islamic militants in the Saudi capital Riyadh for forcing prices up.

John Kilduff, senior vice president for energy at Fimat USA, said he believed prices would rise to at least $51 a barrel in the next few days.

"The hits just keep coming," he said. "The damage to production in the Gulf of Mexico will haunt the market for some time."

Adequate supply

The president of Opec said earlier that the producers' cartel would not review output quotas before December.

Opec president Purnomo Yusgiantoro questioned the significance of the latest price surge in Asia, saying "this is not the price of the Opec basket, it is the price of US crude".

"This is because of Hurricane Ivan and some problems in other places," said the Opec chief, who is also Indonesia's oil minister.

Hurricane damaged property in Florida

"We will wait until we meet in Cairo," he added, referring to Opec's next ministerial meeting in December.

"This is not a supply and demand problem. Opec supply is enough."

Hurricane Ivan temporarily crippled offshore oil production and coastal refinery operations in the Gulf of Mexico, reducing the region's daily output.

Since then, the Caribbean and southern US have suffered another major storm, Hurricane Jeanne.

Slow recovery

Oil production in the Gulf of Mexico was 28% below its normal daily level at the end of last week, according to data from the US Minerals Management Service.

The Gulf of Mexico usually produces 1.7m barrels of oil a day. Since Hurricane Ivan struck, about 10m barrels of output have been lost.

Ivan caused a squeeze on already depleted US fuel stocks, prompting the US Energy Department to take the unusual step of releasing some of the national stockpile of crude oil to refineries.

Many factors have pushed oil prices to break records this year, ranging from insurgency in Iraq which has disrupted exports, to strong demand from the recovering US economy and fast-growing China.

Opec agreed to raise its production quota by one million barrels a day to 27m barrels at its Vienna meeting earlier this month.

Opec reaffirmed its commitment to a target price for crude oil of $22-28 per barrel.




BBC NEWS: VIDEO AND AUDIO
The BBC's Juliet Dunlop
"OPEC has questioned the significance of the latest price surge"



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