Oil price falls despite attack on Chevron

Global oil prices fell to around $64 on Monday, despite the latest attacks on oil installations in the volatile oil-rich Niger Delta of Nigeria.

Reports of militant attacks on oil majors, Chevron, Shell, and Agip helped push prices above $70 last week. However yesterday’s attack on Chevron’s Okan manifold, which the Movement for the Emancipation of the Niger Delta (MEND) claims controls about 80 percent of the company’s off shore crude production, and Sunday’s attack on Shell’s Well Head 20 at Cawthorn Channel 1, is yet to register any impact on price.

Bloomberg reports of Nymex floor trading today showed that price dropped by $2.59 to $64.14, losing 3.88 percent.

Prices have rallied upwards since they slumped to a four-year low of about $37 in December 2008. Analysts say the rise in price has occcured partly because of disruptions in Nigeria, Africa’s largest oil and gas industry.

Revenue affected

For a country that depends largely on oil revenue for its foreign exchange receipts, militant attacks pose a challenge for the federal budget.

According to Bismarck Rewane, a Lagos based economist: “For Nigeria, production has been cut back by the Organisation of Petroleum Exporting Countries (OPEC), and domestic output has also been hit by the Niger Delta unrest... the production hiccups due to unrest pose a revenue problem.”