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Oil Price Hits Record on Nigeria Worries

LONDON -- London crude prices have hit record highs as Nigeria emerges as the new focus of worries about supply security on world oil markets, reported Reuters.

London Brent on the International Petroleum Exchange, the benchmark for European crude imports, set a record of $46 per barrel on Monday, up 67 cents. U.S. light crude gained 49 cents to $49.37 per barrel, a whisker away from August's all-time peak of $49.40.

The potential for a supply disruption from Nigeria, OPEC's No. 5 producer, has added to long-running concerns about supply security from Russia, Saudi Arabia and Iraq.

"All these factors create apprehension in the market and reinforce the view that we're on a knife's edge in terms of supply and demand," said Daniel Hynes, industry analyst at ANZ Bank in Melbourne. "The uncertainties heighten the risk premium applied to this market. Another move to test the $49.40 could well happen this week."

Global supplies are straining to meet the fastest growth in oil demand in 24 years. World crude output is close to its limits with only top exporter Saudi Arabia holding any significant spare capacity.

In Nigeria, rebels seeking political reforms in the impoverished oil-producing Niger delta scored a success with the closure by Royal Dutch/Shell of a small refinery producing 30,000 barrels a day. Shell has evacuated some staff as a security precaution as government troops battle militia, threatening deliveries from the country that pumps 2.5 million barrels daily.

Uncertainty over supplies from YUKOS, Russia's top exporter, also is supporting prices. YUKOS last week trimmed deliveries to China.

In Saudi Arabia, clashes between security forces and suspected al-Qaida followers served as a reminder of the threat to stability in the world's biggest producer.

In Iraq, insurgents fired mortar bombs at the oil ministry building on Saturday, causing minor damage but no injuries. But Iraqi oil exports, temporarily at least, are as high as they have been since last year's U.S.-led invasion.

Extra crude from OPEC, now pumping at a 25-year high, has failed to make any impact. The group produced 30.5 million barrels per day in September, the highest since 1979, tanker-tracking consultancy Petrologistics said.

OPEC president Purnomo Yusgiantoro said the cartel was supplying enough crude and was not to blame for high prices. "This is because of Hurricane Ivan and some problems in other places," said Purnomo of high prices. "This is not a supply and demand problem. OPEC supply is enough," he told reporters in Jakarta.
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