Africa’s biggest oil producer is saying militant attacks have forced the closure of Shell’s Nigerian terminal that exports its benchmark Bonnie Light crude oil, as well as the evacuation of workers from an oil field threatened by militants.
This latest setback to global oil exports is indicative of the of how quickly the stockpiles of crude oil can be depleted after nearly two years of falling prices. A series of production interruptions, from Canada to Libya have fueled concerns over the supply.
From the monster wildfire in Alberta to the political disruptions in Libya and Nigeria, the stoppages have resulted in 3.5 million barrels a day being offline, said Seth Kleinman, a Citigroup analyst, reports the Wall Street Journal. “The growing level of supply disruptions should tighten near-term balances,” Mr. Kleinman wrote in a note.
While experts believe oil prices won’t stabilize until the end of the year, worldwide oil production still exceeds demand by one million barrels a day, keeping oil prices down after they fell to the lowest level in 13 years in 2016. On Wednesday, oil prices in the U.S. were slightly up to $45.99 because of low inventory.
Col. Isa Ado, a spokesman for the Joint Military Force in the oil-rich Niger Delta, said three soldiers guarding the oil field were shot and killed on Monday, forcing the closure of production there. An evacuation is underway at the offshore Bonga oilfield following a militant threat, said Ojobor Cogent, the zonal chairman of the NUPENG oil workers union, according to the New York Times.
Shell spokesman Precious Okolobo would not confirm the evacuation, saying only that Shell is “taking all possible steps to ensure the safety of staff and contractors.” Okolobo did say that Shell had declared force majeure on the Bonny oil exports effective 11 a.m. GMT, to protect contract obligations, citing a leak on the Nembe pipeline.
Aitco Exploration, the pipeline operator said the pipeline was damaged in a militant-led attack by a new group called the Niger Avengers. Nigeria’s oil production has been cut down to 1.68 million barrels a day from 2.2 million barrels. It appears that the attacks will continue until an agreed upon bigger share of oil profits, demanded by militants, goes through, reports the Associated Press.
