Royal Dutch Shell Group .com Rotating Header Image

THE NEW YORK TIMES: Oil Falls on Iran Deal Hopes, Still Alert on Saudi

By REUTERS
Published: February 27, 2006
Filed at 2:02 a.m. ET
SINGAPORE (Reuters) – Oil fell more than 1 percent on Monday as dealers cautiously weighed a “basic'' nuclear deal agreed by Iran and Russia, but fears over Saudi supplies after last week's thwarted al Qaeda attack checked losses.
U.S. oil futures for April delivery (CLc1) slid 72 cents, or 1.14 percent, to $62.19 a barrel.
Prices had soared 4 percent on Friday after news of the failed raid on an oil facility that handles most Gulf supplies from the world's biggest exporter, but dealers locked away some of those profits on Monday as exports flowed undisturbed.
London Brent crude (LCOc1) fell 69 cents to $61.91 a barrel.
“The Iran issue has settled down a little bit after they agreed this joint venture with Russia,'' said Nahiro Niimura, vice president of Mizuho Corporate Bank's derivatives unit in Tokyo. “That drives some market participants to sell.''
Iran said on Sunday it had reached a “basic agreement'' with Russia on jointly enriching uranium. Moscow had proposed for Iran's uranium to be enriched in Russia to defuse suspicions that it might use some of the fuel for nuclear weapons.
“Talks to complete this package will continue in coming days in Russia,'' said Iranian nuclear chief Gholamreza Aghazadeh.
But there was no immediate sign that Tehran would suspend home-grown enrichment, the crux of a dispute that oil traders fear could disrupt exports from OPEC's second-largest producer.
Dealers will now be looking for more clues when the board of the United Nations' watchdog, the International Atomic Energy Agency (IAEA), meets on March 6 to discuss its latest report.
Iran could next be referred to the U.N. Security Council for sanctions, which traders fear could spur Tehran to withhold oil supplies in retribution, although oil ministry officials have repeatedly insisted this will not happen.
“I don't think Iran will stop oil exports because of the money, but we have to wait and see for the IAEA meeting,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
SAUDI SHADOW
In Saudi Arabia, violence flared again on Monday as security forces killed about five suspected militants after besieging a villa in a Riyadh suburb, security sources said.
They said the men were believed to be linked to al Qaeda's raid last Friday on the Abqaiq crude processing plant — the world's biggest — which was foiled by security services before it could cause any serious damage to facilities.
Al Qaeda vowed at the weekend to carry out more attacks.
“The most important thing is the Saudi issue and al Qaeda saying they could attack at any time. We have to watch their activities. Geopolitics will support $60 this week,'' Emori said.
Most of Saudi Arabia's 7.5 million barrels a day of crude oil is exported from the Gulf via the huge producing, pumping and processing facility at Abqaiq.
It was the first direct strike on a Saudi energy target since al Qaeda launched attacks aimed at toppling the U.S.-allied monarchy in 2003, serving oil traders a fresh reminder of the geopolitical risks beyond those in Iran, Iraq and Nigeria.
There was no sign of Royal Dutch Shell (RDSa.L) restarting the 455,000 barrels of daily production that was shut in just over a week ago due to militant violence in Nigeria, the world's eighth-largest oil exporter.
With prices hovering above $60 a barrel, OPEC may be content to agree to keep pumping at near full throttle when it meets on March 8, despite worries about the downturn in second-quarter demand and robust inventories in the United States.
“Our position is that we should not change production,'' Algeria's Energy and Mines Minister Chakib Khelil said on Saturday.

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.