Why crude oil prices are shooting up again

Stories By Martin Ayankola, Lagos

Nigeria and other eleven members of the Organisation of Petroleum Exporting Countries [OPEC], are back to earning high prices from their export commodity, oil, once again, as crude oil prices hit $63 a barrel on the New York Mercantile Exchange [NYMEX] on Monday.

This follows renewed tension between Iran and the United Nations over the former’s refusal to halt the construction of a nuclear facility. The rise in price is also coming against the background of OPEC‘s reduction of output by a total of 1.7 million barrels per day between last year and early this year.

The crude oil futures climbed above $63.00 a barrel on Monday for the first time this year, as tensions between Iran and the international community heightened. Traders are worrying that Iran 's continued detention of 15 U.K. sailors and a partial suspension of cooperation with the U.N. atomic agency in response to a new round of sanctions could lead to a military confrontation.

Phil Flynn, an analyst at Broker Alaron Trdaing Corporation in Chicago said, "The oil market is on guard for the possibility of the conflict heating up even more," adding "the tensions are obviously rising with the passage of new sanctions and the kidnapping of the soldiers." The front-month May crude futures contract on the New York Mercantile Exchange jumped 89 cents to an intraday high of $63.17 a barrel, the highest level for a front-month contract since Dec. 26.

"Tensions are clearly rising in the Middle East," said Mike Fitzpatrick, an analyst at Fimat USA in New York . "The cynical viewpoint is that they probably will want to get as much ink out of this as they can, but I don't think the U.K. and Iran are going to war over this." Iranian Foreign Minister Manouchehr Mottaki said Iran was considering charging the 15 U.K. sailors it seized Friday with illegally entering Iranian waters, despite a warning from U.K. Prime Minister Tony Blair that the seizure was "unjustified and wrong."

The standoff came as the U.N. Security Council voted unanimously on Saturday to tighten sanctions against Iran , prompting Tehran to scale back cooperation with the International Atomic Energy Agency and rekindling worries over Iran 's controversial program.

Should the crisis worsen, then Crude prices are likely to continue moving up. Iran is the fourth largest oil Producer in the World and its exit from the market will definitely create a disequilibrum.

Nigeria gas consumption to increase from five billion

Martin Ayankola, Lagos

The Group Managing Director of the Nigerian National Petroleum Corporation [NNPC], Mr Funso Kupolokun, has expressed optimism that gas consumption in Nigeria would hit 20 billion cubic feet per day by 2011, from the present 5 billion cubic feet per day.

He hinged his optimism on the various gas export Projects being developed in the country and the various power Projects springing up. He also expressed optimism that Nigeria ’s annual earning from gas would hit $10 billion when all the various gas Projects come on steam.

He stated at the Offshore West Africa [OWA] Conference, held in Abuja , last week that the Brass LNG Project’s Final Investment Decision [FID] would be signed in the second quarter.

Mr. Kupolokun, also said that the West African Gas Pipeline Project would be commissioned by first week of April by President Olusegun Obasanjo, while the ground breaking ceremony for the Brass LNG Project would also hold in April.

Nigeria has gas reserves of close 189 trillion cubic feet and Experts have said that gas could also start earning as much as oil for Nigeria in the coming years.