Crude prices jumping

LONDON -- Crude prices surged Monday on market fears that the war in Iraq might take longer than some had anticipated, and because of a disruption of supplies from Nigeria.

Stiffening resistance to the U.S.-led invasion of Iraq has undercut hopes for a brief war and an early rehabilitation of that country's oil industry. Iraq pumped 2.5 million barrels a day before fighting began and typically exported about four-fifths of that amount.

May contracts of North Sea Brent, Europe's benchmark crude, jumped $1.35 a barrel to $25.70 in afternoon trading in London. Contracts of U.S. light, sweet crude for May delivery were up $1.29 at $28.20 a barrel in trading in New York.

Fighting around burning oil wells in southern Iraq's Rumeila oil field has driven out civilian oil-fire specialists working to quell the blazes, the top firefighter said. U.S.-led forces had previously thought the field's facilities were secure.

"It's not nearly as safe as they said it was," said Brian Krause, vice president and senior blowout specialist for Houston-based Boots and Coots. Speaking Monday in neighboring Kuwait, he added: "We're kind of sitting ducks out there."

Coalition forces have made a priority of securing Iraqi oil installations to prevent their possible sabotage by Iraqis.

Confusion persisted over the extent of any Iraqi plans to damage or destroy their southern oil facilities. British military sources said last week that almost all Iraqi oil facilities had been mined or booby-trapped, indicating that Saddam Hussein was prepared to blow up his entire economy.

Iraq's newspaper Al-Thawrah said on its Web site Sunday that this was a lie.

"What is burning in that area is no more than artificial trenches filled with oil to be used as obvious methods of defense," the newspaper said. Iraqis have sometimes ignited oil in trenches to create thick smoke to confuse their attackers.

U.S. Brig. Gen. Vince Brooks said Saturday that only nine wells in southern Iraq had been sabotaged. Iraq has 1,685 producing wells.

"I don't think that the Iraqis ever really intended to blow these wells up and keep them burning forever," said Rob Laughlin, managing director of London brokerage GNI Man Financial.

Still, he blamed fears of an "elongating" war for causing much of the market's jitters.

Another cause for concern was social unrest in Nigeria that has forced oil companies there to suspend at least 40 percent of the country's production.

Shell Development Petroleum Co., a unit of Royal Dutch/Shell in Nigeria, has shut down 370,000 barrels a day in crude output after evacuating facilities in the oil-rich Niger River delta, company spokeswoman Kate Hill said Monday. ChevronTexaco on Sunday evacuated staff and shut practically all of its installations in the area, suspending production of 440,000 barrels a day.

The Niger delta has suffered civil unrest between rival ethnic Ijaw and Itsekiri communities in the run-up to parliamentary and presidential elections in April. Nigeria, which normally pumps about 2 million barrels a day, has now lost more than 800,000 barrels in daily production due to weeks of fighting.

Despite the problems, a survey of U.S. gas prices released Sunday found that they increased less than a penny nationwide over the past two weeks.

The average price for gas nationwide, including all grades and taxes, was about $1.76 a gallon on Friday, according to the Lundberg survey of 8,000 stations.

"Right now it appears possible that this year may already have seen its peak pump price," said analyst Trilby Lundberg.

War fears and uncertainty over the outcome of the Iraq crisis combined with a strike in Venezuela to send gas prices up more than 25 cents a gallon so far this year.

The price is leveling off now due to factors including Venezuela's comeback after the strike and production increases by Saudi Arabia, Kuwait and others, Lundberg said.

"There was a lot of jargon such as war premium -- it was more like an uncertainty premium," Lundberg said. "The perception changed in favor of supply security enough so that oil futures prices have tumbled down."

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