Oil has surged above $76 a barrel, its highest price in nearly a year. That follows fresh violence in Nigeria, where the main militant group in Niger Delta has just called off a month-long ceasefire.
Gunmen attacked a drilling rig and have kidnapped five oil workers. In August last year oil briefly reached $78.65, which was an all time record.
Traders says right now supply is tight and demand continues strong. Ray Carbone at the New York Mercantile Exchange: “OPEC producing countries cannot produce enough petrol – gasoline – to satisfy their own demand, and so I think that is very supportive over the long term for oil prices. I think we’re going higher. I would not be surprised at all.”
As well as OPEC cutting the amount of crude it pumps, Nigeria’s output is being disrupted by militants who want more of the country’s oil wealth spent on the impoverished region where much of the industry is based. They have stepped up their attacks in the last year and a half.
In addition, in the US demand for fuel will increase during the summer driving season and as refineries come on line, after a spate of lengthy, unplanned maintenance shutdowns.