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World oil prices rise before Norway lockout

World oil prices advanced on Monday, rebounding from recent losses ahead of a looming lockout of Norwegian production.

World oil prices rise before Norway lockout
Minister of Petroleum and Energy Ola Borten Moe (File photo: Marit Hommedal/Scanpix)

Brent North Sea crude for delivery in August increased by 81 cents to $99.00 per barrel in late morning deals in London.

New York's main contract, light sweet crude for August rose 66 cents to $85.11 a barrel.

"A factor providing particular upside support for oil prices (on Monday) is the failed negotiations between the Norwegian oil industry association and employees of the industry," said analysts at the Vienna-based JBC Energy consultancy.

Norway confirmed that oil and gas production would be halted from Tuesday as a result of an industry lockout, after talks between employers and unions failed to end a prolonged strike.

"As the situation stands now, the lockout will be enforced from midnight (2200 GMT Monday)," petroleum and energy ministry spokesman Håkon Smith-Isaksen said on Monday.

"The consequence of the lockout is a controlled close-down of all Norwegian petroleum production and exports" when stocks are exhausted, he said.

The lockout in western Europe's top producer was announced by Norway's state oil giant Statoil on Friday in response to the strike launched on June 24th by more than 700 North Sea oil workers over pensions.

Employers group OLF says the strike has cost the industry tens of millions of euros a day.

The lockout will affect all production on Norway's continental shelf, where about 50 companies operate, including Statoil, BP and Royal Dutch Shell.

The oil market also inched higher on Monday as traders bought up cheap crude following a price plunge late last week caused by disappointing US jobs figures, analysts said.

WTI and Brent crude had on Friday slumped more than $2.50 a barrel due to dismal US jobs data, which yet again raised fears that the economy of the world's largest oil consumer was faltering.

"Oil is holding relatively steady, it has edged up a tiny bit," said Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore.

"Oil declined substantially last Friday… Perhaps because of the sharp decline, we are seeing some buying this morning," he told AFP.

The US economy added only 80,000 jobs in June, well below forecasts, leaving the unemployment rate stubbornly stuck at 8.2 percent, according to Labor Department statistics released on Friday.

The figures sparked deep concern in the oil market because the United States is the world's biggest crude-consuming nation.

Shum warned that the numbers would continue to affect the crude market in the near term.

"I expect that concerns about the US economy downshifting will continue to put downward pressure on oil," he said.

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OIL

NGOs take Norway to European Court over Arctic oil exploration

Two NGOs and six young climate activists have decided to take Norway to the European Court of Human Rights (ECHR) to demand the cancellation of oil permits in the Arctic, Greenpeace announced on Tuesday.

NGOs take Norway to European Court over Arctic oil exploration
Northern Norway. Photo by Vidar Nordli-Mathisen on Unsplash.

It’s the latest turn in a legal tussle between environmental organisations Greenpeace and Young Friends of the Earth Norway on one side and the Norwegian state on the other.

The organisations are demanding the government cancel 10 oil exploration licenses in the Barents Sea awarded in 2016, arguing it was unconstitutional.

Referring to the Paris Agreement, which seeks to limit global warming to less than two degrees Celsius above pre-industrial levels, the organisations claim that the oil licenses violated article 112 of Norway’s constitution, guaranteeing everyone the right to a healthy environment.”

The six activists, alongside Greenpeace Nordic and Young Friends of the Earth Norway, hope that the European Court of Human Rights will hear their case and find that Norway’s oil expansion is in breach of human rights,” Greenpeace said in a statement.

In December, Norway’s Supreme Court rejected the claim brought by the organisations, their third successive legal defeat.

READ MORE: Norway sees oil in its future despite IEA’s warnings 

While most of the judges on the court agreed that article 112 could be invoked if the state failed to meet its climate and environmental obligations– they did not think it was applicable in this case.

The court also held that the granting of oil permits was not contrary to the European Convention on Human Rights, in part because they did not represent “a real and immediate risk” to life and physical integrity.

“The young activists and the environmental organisations argue that this judgment was flawed, as it discounted the significance of their environmental constitutional rights and did not take into account an accurate assessment of the consequences of climate change for the coming generations,” Greenpeace said.

On Friday, the Norwegian government unveiled a white paper on the country’s energy future, which still includes oil exploration despite a warning from the International Energy Agency (IEA).

The IEA recently warned that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.

The Norwegian case is an example of a global trend in which climate activists are increasingly turning to courts to pursue their agenda.

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