Crude buoyant on tropical storm, Georgia tension

18 August 2008 11:43  [Source: ICIS news]

LONDON (ICIS news)--Crude prices were buoyant on Monday as a tropical storm threatened oil and gas production in the Gulf of Mexico and tensions remained high over Russia’s conflict with Georgia.

 

October Brent on ICE Futures crude prices hit a peak of $113.51/bbl at 10:00 GMT after closing last week at $112.55/bbl, before falling back to $113.24/bbl.

 

At the same time, September NYMEX crude was trading at $114.64/bbl, having hit a high of $115.35/bbl, a gain of $1.38/bbl over the previous close.

 

Tropical Storm Fay was currently over the centre of Cuba and was expected to head north-northwest over the next 24 hours before turning north on Tuesday, said the National Hurricane Center.

 

Some workers have been evacuated from offshore oil and gas facilities in the eastern and central areas of the Gulf of Mexico, but the storm was predicted to make landfall further east in Florida after becoming a hurricane.

 

In Georgia, rail exports of oil from Baku in Azerbaijan to Batumi on the Black Sea coast, amounting to 50,000-70,000 bbl/day, were halted due to damage to the railway line.

 

“The Georgian railways are looking at alternative routes,” said BP spokesman Robert Wine.

 

Russia was expected to begin withdrawing troops from Georgia following a promise by its president Dmitry Medvedev to abide by a ceasefire.

 

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

 

Azerbaijan suspended oil exports through the Georgian ports of Batumi and Poti on Sunday after an explosion damaged a key rail bridge.

 

Oil and gas exports from the Georgian ports of Batumi and Supsa had already been disrupted due to the conflict with flows along the Baku-Supsa crude pipeline halted.

 

BP, which operates the pipeline, said it would remain suspended for the time being while the security situation was assessed.   

BP was repairing the key 1m bbl/day Baku-Tbilisi-Ceyhan (BTC) Azeri pipeline, which had been damaged by a recent explosion and fire in eastern Turkey.

 

Turkey’s energy minister Hilmi Guler said that the pipeline could resume within the next few days, according to Reuters news agency, while BP said the damage and repair plan was still being assessed.

 

Alex Davis and James Dennis contributed to this article
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