Brazil pushed up oil cost

Just a few weeks ago Brazil's President came on Fox News and said that he wanted Brazil to get into the World oil market, and now this? Brazil helped push oil prices up $5 to a new record - $147 a barrel on Friday as strike threats and deepening geopolitical tensions raised fears over the safety of supplies.

Having rallied more than $5 overnight, Brent crude rose a further $5.22 to $147.25 a barrel.

A union of employees from Petrobras, the Brazilian state-controlled oil company, in the Campos basin – where 80 per cent of Brazil’s oil is produced – said that they would shut down rigs to press for better pay.

When Petrobras employees refused to work for five days in 2001, oil production fell sharply and Brazil had to import extra oil. However, since then Petrobras and the unions have resolved their disputes without severe stoppages.

Oil also got a boost from news that the main militant group in Nigeria’s oil-rich Niger Delta was abandoning a ceasefire in response to Britain’s offer to help tackle lawlessness in the area.

Militants have helped cut Nigeria’s oil exports by more than 20 per cent since 2006 by attacking pipelines and other installations. It seems that we are colonializing the wrong part of the world, in a feeble attempt to stabalize oil prices and production.

News that Iran test-fired more missiles on Thursday had little impact on the oil market. MF Global said traders were increasingly reluctant to bid up prices on “what if?” headlines. Crude hit a record above $145 a barrel last week on speculation about conflict between the west and Iran over Tehran’s nuclear programme.

Meanwhile, the Organisation of the Petroleum Exporting Countries forecast that world oil demand would rise by 1.3m barrels per day annually to 2012 before easing to 1.2m bpd in the longer term.

In its World Oil Outlook 2008, Opec said that the key to future oil demand growth would be transport, especially in developing countries. The oil cartel said almost $800bn would have to be invested in increasing refinery capacity to meet the additional demand expected by 2030.

The need for oil from Opec countries will soon fall, the International Energy Agency said Thursday, forecasting global oil demand growth would slow next year while production would rise.

The IEA increased its forecast for 2008 oil demand by 80,000 barrels a day, or 0.1 per cent, to 86.85m barrels a day.