Tuesday November 7 3:58 PM ET Oil Closes Higher on Iraq Export Halt

LONDON (Reuters) - Oil prices ended sharply higher on Tuesday on news that Iraq had suspended oil exports from its outlet in Turkey in a dispute over how Baghdad will be paid for its crude.

Iraq halted oil loadings at the Turkish port of Ceyhan in a disruption that will last from 12 to 24 hours, a United Nations (news - web sites) source said.

The source said Iraq will resume loadings once the United Nations has a mechanism in place to receive payment in Europe's single currency the euro rather than in dollars.

Shortly afterwards, a U.N source said that the United Nations had finalized a new letter of credit that will allow Iraqi oil customers to pay Baghdad in euros, bringing prices off their peaks.

Brent last traded 41 cents higher at $31.70, the daily high, while U.S. light stood 54 cents stronger at $33.40 a barrel at the close.

Iraq's move to halt exports from Ceyhan appeared to be Baghdad's latest bid to use crude barrels as a political weapon in its defiance of the West, especially as Americans were casting their vote for a new president, analysts said.

Adding to bullish market sentiment, the United Nations said Iraqi oil exports slipped 560,000 barrels per day (bpd) to an average 2.11 million bpd in the week ended November three under the U.N.-supervised oil-for-food program.

The market had gained early strength on an export disruption in OPEC (news - web sites) producer Nigeria.

Community unrest in Nigeria has reduced flows to the country's Bonny export terminal and delayed some exports.

Oil major Shell said on Monday throughput at its 475,000 barrel-a-day facility had been cut by 250,000 bpd because of the unrest and illegal tapping of crude.

Dealers on Tuesday said some of the oil was back onstream, cutting the shortfall to 100,000 bpd.

Shell said it had declared force majeure -- a legal term excusing a company from contracts because of unforeseeable or uncontrollable events -- on its export commitments for the rest of November.

Nigerian oil production facilities have increasingly become the target of attack in the volatile Niger Delta region by militant communities, who want a greater share of oil wealth.

The latest disruptions came just as market worries over the possibility of U.S. heating oil supply shortages began to ease.

Temperatures to date in the early days of winter have been normal or above normal in the heating oil dependent U.S. Northeast.

Attention also was turning again to the Organization of the Petroleum Exporting Countries (OPEC), which convenes in Vienna on Sunday.

The cartel hiked output for the fourth time this year by 500,000 bpd on October 31 under its automatic price band mechanism, aimed at stabilizing oil prices in a range between $22 and $28 a barrel.

``The meeting will be only for an exchange of views on market conditions and what is happening,'' Sheikh Saud Nasser al-Sabah, oil minister for OPEC-member Kuwait, said on Monday.

http://dailynews.yahoo.com/h/nm/20001107/bs/markets_oil_dc_297.html

-- Carl Jenkins (somewherepress@aol.com), November 07, 2000