Strike May Push Price of Crude Oil Above $30

Failure to resolve the strike that has crippled Venezuela’s oil industry may push crude oil prices above $30, oil analysts said.

Prices rose 5.6% to $28.44 a barrel in New York last week. Venezuelan President Hugo Chavez rejected the Bush administration’s call Friday for “early elections.” Hundreds of thousands demonstrated in Caracas over the weekend, demanding that Chavez resign or hold elections by the end of March.

The possibility of war in Iraq if Saddam Hussein is shown to be hiding weapons of mass destruction adds to concerns about a supply crisis, analysts said.

The strikers have paralyzed oil exports by Venezuela, which was shipping about 2.4 million barrels a day, half to the U.S., before the strike began Dec. 2. Venezuela this year provided 13% of U.S. oil imports.

“The only region that could make up for the Venezuelan oil is the Persian Gulf,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Mass.

It takes six to eight weeks for Persian Gulf cargoes to get to North America versus a week from Venezuela, Emerson said.

To make up for missing Venezuelan oil, other members of the Organization of the Petroleum Exporting Countries may be able to boost daily output by 4.6 million barrels above last month’s levels, according to Bloomberg estimates of capacity available within 30 days.

Although analysts attribute most of the gain in oil prices of the last two weeks to the Venezuelan strike, oil touched $30.83 on Oct. 1, its highest level in 19 months, on concern that a conflict with Iraq was imminent. Prices dropped as low as $25.19 in mid-November as that threat eased.

U.S. refiners were counting on stable Venezuelan shipments should a war in Iraq disrupt Persian Gulf exports.

Gasoline futures have risen 14% to 83.95 cents a gallon on the New York Mercantile Exchange during the two-week strike. The closing price Friday was the highest since Oct. 31. The futures were up 13% last week, the biggest weekly gain since October 2000.

Heating oil futures have risen 7.7% during the strike to 81.56 cents a gallon in New York, the highest closing price since Oct. 1.