Brent falls $1/bbl despite ongoing Georgia conflict

12 August 2008 09:43  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude futures fell by more than $1/bbl on Tuesday, amid concerns over weaker global demand and despite the ongoing conflict between Russia and Georgia over the breakaway South Ossetia region

 

At 08:26 GMT, September Brent on London’s ICE Futures was trading at $111.15/bbl, down $1.52/bbl on Monday’s settlement price, having earlier fallen to a low of $111.11/bbl, down $1.56/bbl

 

At the same time, September NYMEX light sweet crude futures were trading at $113.06/bbl, down $1.39/bbl on Monday’s settlement level. Earlier the contract hit a low of $113.00/bbl, down $1.45/bbl.

 

Prices continued to fall amid growing concern the economic slowdown which started in the US was spreading around the globe and impacting demand. These concerns were strengthened by recent news of an unexpected fall in Chinese crude imports in July of 7%, the largest drop since January 2005.

 

While crude and other commodities have declined, the US dollar continued to firm against the euro, hitting a six month high.

 

Meanwhile, concerns remained over the ongoing military conflict between Russia and Georgia and the impact on supplies from the Caspian region. Georgia has appealed to the West to intervene in the dispute. However, so far Russia has ignored pleas to halt its operations with its troops having moved further into Georgia and closing in on the capital Tbilisi.

 

Georgia is an important transit hub for the export of Azeri crude from the Caspian region into western Europe.

 

Exports from the Georgian ports of Batumi and Suspa have been disrupted although both ports were said to be operating. However, major Caspian producers Kazakhstan and Azerbaijan said on Monday that they were suspending oil supplies via Georgia.

 

Flows along the along the key Baku-Tbilisi-Ceyhan (BTC) Azeri pipeline, have been disrupted since an explosion and fire on part of the network in Turkey last week. It was estimated the repairs would take a couple of weeks.

By: James Dennis
+65 6780 4359

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