Oil prices slide as Norway strike ends
OIL PRICES fell more than 1 per cent yesterday after Norway’s government ordered an end to a strike, avoiding the threat of a total production shutdown, and on data showing curtailed crude oil buying by China in June.
Brent crude retreated under $100 a barrel after Norway’s government ordered a last-minute settlement in a dispute between striking oil workers and employers.
The deal prevented a cut-off of more than two million barrels per day (bpd) of crude oil, natural gas liquids and condensate.
Norwegian law allows the government to force striking workers back on the job to protect the industry, on which much of the country’s economy depends.
Citing potential economic consequences, Oslo intervened in the latest dispute with the strike in its third week and minutes before an industry imposed lockout.
“The intervention [by the Norwegian government] means that a major supply disruption is prevented,” Olivier Jakob, managing director at consultancy Petromatrix, wrote in a note.
The government issued a warning to the industry not to force ultimatums that risk cutting supply.
“I am not impressed by how the employers’ group chose to use the lockout weapon,” labour minister Hanne Bjurstroem said. “It signals that they don’t take the extensive consequences of a complete shutdown of the Norwegian continental shelf seriously. In my view, this is not the best way to deal with a legal labour conflict.”
Norway, which is not a member of the Organisation of Petroleum Exporting Countries (Opec), is Europe’s second-biggest oil and natural gas exporter.
Minutes after crossing a midnight deadline that would have triggered a lockout, the government announced its plan to resolve the strike with compulsory arbitration.
Brent crude futures for August delivery dropped as much as 2.1 per cent to $98.22 a barrel on the ICE Futures Europe exchange and were at $98.93 at 4pm BST yesterday, compared with $100.32 before the Norwegian government’s intervention.
Shares in Statoil, the Nordic region’s biggest oil company, gained 1.6 per cent to 143 kroner in the Norwegian capital. – (Bloomberg)