Marketplace Report: Oil's Troubled Waters
ALEX CHADWICK, host:
Back now with DAY TO DAY. I'm Alex Chadwick. The price of crude jumped almost $2.00 a barrel today, following reports of an attempted bomb attack on a major oil installation in Saudi Arabia. Security forces did foil the attack, but the fact that Saudi Arabia was targeted was enough to unsettle the markets. Joining us from the Marketplace European desk in London is Stephen Beard. Steven, what do we know about this incident so far?
STEPHEN BEARD reporting:
Well, it appears that suicide bombers in three cars packed with explosives tried to ram their way into this major oil processing plant in eastern Saudi Arabia. Guards at the facility apparently opened fire on the cars, and all three blew up, killing their occupants.
CHADWICK: So, oil production, though, not affected.
BEARD: Well, it was, but only very briefly, it seems, according to reports, that the flow of oil was haltered, and then very quickly resumed.
CHADWICK: And still, the price jumped, and significantly, it seemed to me, $2.00 a barrel. The market's nervous?
BEARD: Very nervous; yes, and especially because it's Saudi Arabia, of course, the world's biggest export of crude, seven and a half million barrels a day. There have been terrorist attacks there before, of course: on oil company offices, on compounds, housing, foreign workers, but the significance of what happened today is that this was the first direct assault on an oil production facility, and this was an important one.
This is a big one. This handles about two-thirds of the Saudi oil. Analysts reckon that a successful attack on this plant could knock out half of Saudi Arabia's exports for up to a year.
CHADWICK: Well, maybe the market anxiety, maybe it's especially anxious because they're also are developments in another major oil producer today, Nigeria.
BEARD: That's right. The Anglo-Dutch oil giant Shell got some bad news today. They were ordered by a Nigerian court to pay one and a half billion dollars in compensation to the people of the Niger Delta. This is compensation for environmental damage. This has been one of the reasons for the unrest in this region. Many local people there feel they haven't shared in the oil wealth, and their environment has been spoiled by the drilling. Shell, by the way, says it's going to appeal against the court's decision.
CHADWICK: So, maybe more trouble coming in the delta. This isn't going to settle it if it's under appeal.
BEARD: That's right, and there's been a lot of disruption there over the past week or so, as a result of pipeline attacks and kidnappings. Shell has shut down half of its production in the Delta, and that's reduced Nigeria's oil output by about a fifth, about half a million barrels a day. Pretty bad news for the U.S. Nigeria is the U.S.'s fifth biggest source of foreign oil.
CHADWICK: All right, Stephen Beard, and thank you.
Stephen Beard of Public Radio's Daily Business show, Marketplace, produced by American Public Media.