Brent rises $2/bbl on Georgia supply concerns

11 August 2008 09:46  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures rose by close to $2/bbl on Monday, amid concerns military conflict between Russia and Georgia could further disrupt supplies from the Caspian region, as Azerbaijan and Kazakhstan announced they were suspending exports via the country.

 

At 08:10 GMT, September Brent on London’s ICE Futures was trading at $115.15/bbl, up $1.82/bbl on last Friday’s settlement price, having earlier hit a high of $115.24/bbl, up $1.91/bbl

 

At the same time, September NYMEX light sweet crude futures were trading at $116.70/bbl, up $1.50/bbl on Friday’s settlement level. Earlier they had hit a high of $116.89/bbl, up $1.69/bbl.

 

Fighting between Russia and Georgia erupted after Georgia sent forces into the pro Russian breakaway region of South Ossetia on Thursday. Georgia shelled the capital of South Ossetia on Monday, while Russian warplanes have attacked Georgia.

 

The ongoing conflict has resulted in the suspension of shipments of crude and oil products from two of Georgia’s ports.

 

The impact on prices from the conflict has been mitigated by a rise in the value of the US dollar amid economic weakness in the eurozone.

 

Georgia is an important transit hub for the export of Azeri crude from the Caspian region into western Europe via two major pipelines which have the advantage of not crossing Russian territory.

 

Flow along one of these pipelines, the Baku-Tbilisi-Ceyhan (BTC) Azeri pipeline, has been disrupted since an explosion and fire on part of the network in Turkey. The repairs were estimated to take a couple of weeks.

 

As a result, production of Azeri Light was thought to have been cut by around 400,000 bbl/day and arrangements have been put in place for exports to be diverted.

 

 

 

By: James Dennis
+65 6780 4359

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