Price of Oil Rises Nearly $1 Per Barrel : Analysts Cite Reports That Soviet Nuclear Plants May Have Been Shut Down

Oil prices surged by almost $1 a barrel Friday amid reports that the Soviet Union has moved to shut down more than a dozen nuclear reactors. The action could force the world’s largest oil producer to remove some oil exports from the bloated market.

Analysts said an Iranian attack on a Saudi Arabian oil tanker in the Persian Gulf and strong U.S. gasoline demand also bolstered oil prices.

On the New York Mercantile Exchange, West Texas Intermediate--the key U.S. crude for immediate delivery--jumped by 92 cents to $14.73 a barrel. It was the highest close since the crude settled at $15.11 a barrel on Feb. 24.

Traders said West Texas Intermediate broke through a major resistance level at $14 a barrel.

On the European spot market, where oil is sold to the highest bidder, Britain’s benchmark North Sea Brent crude leaped by 90 cents to $13.55 a barrel.

15,000 Megawatts Lost

Preliminary intelligence data indicated that the Soviet Union has shut down several reactors in the wake of the Chernobyl nuclear accident. Industry experts estimated that the Soviets may have reduced their electrical production by about 15,000 megawatts--or the equivalent of roughly 400,000 barrels of oil a day.

Observers said the Soviets, who have been selling about 1.2 million barrels a day to the West to capture hard currency, may have to reduce their oil exports to offset domestic power shortages created by any reactor shutdowns.

The Soviet Union is a prime target of the Organization of Petroleum Exporting Countries’ campaign to flood the already glutted market in a high-stakes gamble to compel outside producers to prop up prices by curbing exports. Supplies now exceed demand by an estimated 2.5 million barrels a day.

In New York, a spokesman for the Atomic Industrial Forum trade association estimated that if the reactors have been shut down, the Soviets may have removed about 5% to 6% of the country’s electrical power generation. In 1985, nuclear plants provided 11% of the Soviet Union’s electricity.

Analysts said the attack by a suspected Iranian jet fighter on a Saudi oil tanker in the Persian Gulf also strengthened oil prices because of renewed fears that the Iraq-Iran war could hamper shipping traffic in the vital oil route. Saudi Arabia is an ally of Iraq.

U.S. Demand for Gasoline May Rise

Expectations that U.S. gasoline demand will rise by as much as 400,000 barrels a day this year continued to support prices, they said.

Unleaded gasoline for June delivery climbed 1.24 cent to 51.64 cents a gallon and home heating oil by 2.49 cents to 43.05 cents a gallon on the New York Mercantile.

The most recent report of the U.S Energy Information Administration said that gasoline demand for the four weeks ended April 25 was up 4.4% to 7.2 million barrels, against the same period last year.

The figure is just below the all-time record demand for gasoline hit in 1979.

Earlier this week, the American Petroleum Institute said that gasoline inventories at refineries were down more than 750,000 barrels.

U.S. oil traders said the strong demand for gasoline brought refiners back into the market with whetted appetites for the light crude oils, such as West Texas Intermediate, which, when refined, have high yields of gasoline.