The game plan was that the Fed was done and the economy seemed suddenly not so weak so the dollar would continue to strengthen.  Plus the Saudi’s are bringing on their last big new fields this year and next.  Plus oil demand growth is slowing all over except among the oil exporting countries.  Plus oil tried to bust $120 for a while and failed after a long and strong rise.  So clearly the fundamentals and the technicals are aligned to say that oil is headed for a correction.  Right? 

And right …

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A few months ago, as the oil price was butting up against $100 and then finally going through it and then dropping back down below it, most respected oil analysts whom I read believed that the near term would see lower oil prices.  Most thought early 2008 would see a retracement into the low $80’s. That expectation is one reason the recent strong and consistent rally to just under $120 as of now is so dramatic.  But what comes next?  How much of the last $20  is speculation and …

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Umaru Yar’Adua, the new President of Nigeria, wants to increase the share of oil wealth flowing to the state at the same time that the victimized natives of southern Nigeria’s Delta region from whence the oil flows want a bigger piece of the action too.  Yar’Adua thus faces a series of enemies, none of whom is insubstantial.  They include Shell Oil, the largest of the foreign oil companies that produce nearly all Nigerian oil, the rebel group MEND that represents the Delta region and has already succeeded in removing over …

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Saudi Arabia is considered the “swing producer” of oil because conventional wisdom presumes they have the spare capacity and the will to boost or reduce supply as global conditions require.  But some doubt KSA true capacity .

If KSA is actually constrained, Nigeria and Iraq may be the world’s real swing producers in two senses.  First, they both have the geological opportunity to increase production substantially over a period of just a few years.  Second, and more relevant in the short term, both countries face a real risk that political problems …

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One of England’s most respected newspapers, the Guardian’s Observer is reporting that Royal Dutch Shell’s ability and/or willingness to continue as the largest operator of oil production facilities in Nigeria may be in jeopardy.   Nigeria is an important pressure point in the global oil supply capacity.  The government has seemed to be tilting towards a Chavez/Russian model of expropriation through negotiation for some time.  This is not the first report of growing unhappiness of Shell with its position in Nigeria.  If it turns out that there is indeed fire where …

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According to a report in The Oil and Gas Journal (2/18/08), the Nigerian government has declared that natural gas producers must sell an increasing amount of their production into the domestic market at less than market prices.  Such a policy is obviously a form of taxation or confiscation of the private companies by the government.  While the policy is understandable, it also is having the predictable affect of limiting the interest of foreign companies in investing in gas production efforts in Nigeria.  Thus, Nigeria has a sort of …

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Tensions are increasing between officials of Nigeria and the managements of international oil companies (IOC’s) that operate there.  The new Nigerian government, like many other oil exporting countries, has embarked on a program to re-negotiate the split of oil revenues.  Meanwhile, Shell says the government has failed to live up to its funding obligations according to existing agreements.  

More recently the government has threatened western oil firms with serious penalties if they do not move their personnel back into the Niger Delta and resume producing oil, despite the risks of injury, …

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Below is an excerpt from the Eurasia Group’s 2008 global political forecast.  Nigeria and Iraq could each increase oil production significantly if their internal political problems were to be peacefully resolved. It thus behooves oil investors to keep fairly close tabs on developments in both countries. 

In both cases an aggrieved minority holds the key.  In Nigeria MEND and other Delta forces are keeping many hundreds of thousands of barrels per day off the market because the Delta people are not getting their fair share of oil funds while they …

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A Dutch writer points to a number of factors currently in play that could push oil prices higher.   Here is the argument:

Crude Oil Targets $125, Global Production Future Shows Diffuse Picture

By Sven Ridley-Wordich
04 Jan 2008 at 12:12 PM GMT-05:00

AMSTERDAM (ResourceInvestor.com) — Crude oil prices have hit a new all-time record high, after breaking through the $100 per barrel mark on January 3.

NYMEX futures reached a level of more than $100 on Thursday, based on increased violence in the Niger Delta of Nigeria that removed 500,000 barrels per day (bpd) …

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Nigeria is a devastatingly poor and politically corrupt African nation that produces about 2 mb/d of light, sweet crude oil - down from the 2.5 it used to produce before a local organization decided to get involved.  Power is centralized in the northern capital city, Lagos.  Oil is produced in and around the southern Niger Delta.  The people of the Delta get a very raw deal.  They receive little to no financial benefits from oil sales but they get all of the impact of the substantial spills and other pollution …

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click here.

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