Oil prices hit an all-time high, near $120 a barrel, Monday after a weekend refinery strike closed a pipeline system that delivers a third of Britain’s North Sea oil to refineries in the UK.
Workers at the Grangemouth oil refinery in Scotland walk out Sunday at the start of a two-day strike
The shutdown comes amid supply outages in Nigeria that have helped to support oil against a strengthening dollar.
“We’ve got a confluence of a number of events that have really disrupted crude oil supply,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “That’s what’s driving oil to a new record even though the U.S. dollar actually strengthened a bit.”
Light, sweet crude for June delivery rose to a record $119.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract eased back to $118.96 a barrel by late afternoon in Singapore, up 44 cents from Friday’s close of $118.52.
BP Sunday shut down the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. because of a 48-hour walkout by employees at a refinery in central Scotland.
Workers walked out of the Grangemouth refinery vowing not to give ground in their dispute with refinery owner Ineos over plans to close a generous pension scheme to new employees.
Ineos chief executive Tom Crotty said it could take a week for the plant to return to production once the strike ends on Tuesday. BP said its pipeline could be up and running within 24 hours.
BP’s Kinneil plant, the onshore processing center for the pipeline system, is powered from the Grangemouth site.
“With the refinery being shut down, it will affect supplies from the North Sea and that has a potentially significant impact,” said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. “That comes at the same time that there’s production disruptions from Nigeria so the combined effect of those is the immediate factor that’s put pressure on oil prices.”
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