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Crude rises on Georgia fighting Oil prices ease despite fighting
(about 10 hours later)
Crude oil prices have forged higher on fears that military conflict between Russia and Georgia could disrupt supplies in the region. Crude oil prices have eased after earlier rising on fears that military conflict between Russia and Georgia could disrupt supplies in the region.
US light, sweet crude was up 71 cents at $115.91 a barrel, while London's Brent crude gained 70 cents to $114.03 after prices had fallen on Friday. US light, sweet crude fell more than $2 to $112.72 a barrel, its lowest level since May. It later ended the trading session at $114.45.
Georgia is not an oil producer but the country is a key transit point for crude and gas exports.Georgia is not an oil producer but the country is a key transit point for crude and gas exports.
Oil prices have fallen in recent weeks after hitting a record $147.27 in July.Oil prices have fallen in recent weeks after hitting a record $147.27 in July.
In London, Brent crude fell as low as $111.07 during a volatile session, before rising to $112.67.
Pipeline unscathedPipeline unscathed
BP has a 30% stake in the Baku-Tbilisi-Ceyhan oil pipeline, the world's second largest, that runs from Azerbaijan through southern Georgia into Turkey and can transport up to 1.2 million barrels of oil a day.BP has a 30% stake in the Baku-Tbilisi-Ceyhan oil pipeline, the world's second largest, that runs from Azerbaijan through southern Georgia into Turkey and can transport up to 1.2 million barrels of oil a day.
A smaller pipeline also runs to the Georgian Black Sea port of Supsa.A smaller pipeline also runs to the Georgian Black Sea port of Supsa.
The pipeline was the subject of early post-Cold War diplomacy Paul Mason, Newsnight economics editor Read Paul's blog in fullThe pipeline was the subject of early post-Cold War diplomacy Paul Mason, Newsnight economics editor Read Paul's blog in full
A BP spokesman said the pipeline had not been damaged by the fighting. But reports said a fire had disabled the pipeline last week before the conflict erupted.A BP spokesman said the pipeline had not been damaged by the fighting. But reports said a fire had disabled the pipeline last week before the conflict erupted.
It had been hoped that transporting oil through the region would make the West less dependent on supplies from Russia.It had been hoped that transporting oil through the region would make the West less dependent on supplies from Russia.
"The military conflict in Georgia is the key factor in pushing up oil prices this morning. So much has happened so quickly since we first heard of Russia's attack last week," said David Moore, an analyst at the Commonwealth Bank of Australia in Sydney"The military conflict in Georgia is the key factor in pushing up oil prices this morning. So much has happened so quickly since we first heard of Russia's attack last week," said David Moore, an analyst at the Commonwealth Bank of Australia in Sydney
CriticismCriticism
Diplomats are pressing for a ceasefire in the conflict over the breakaway province of South Ossetia, but Russia and Georgia have accused each other of launching new attacks.Diplomats are pressing for a ceasefire in the conflict over the breakaway province of South Ossetia, but Russia and Georgia have accused each other of launching new attacks.
Georgia said dozens of Russian bombers were attacking targets inside its territory, including around Tbilisi.Georgia said dozens of Russian bombers were attacking targets inside its territory, including around Tbilisi.
Russia said Georgian attacks on the South Ossetian capital Tskhinvali had killed three of its troops.Russia said Georgian attacks on the South Ossetian capital Tskhinvali had killed three of its troops.
The US has strongly criticised Russian military action against Georgia as fighting continued over the breakaway province of South Ossetia.The US has strongly criticised Russian military action against Georgia as fighting continued over the breakaway province of South Ossetia.
President George W Bush told US TV he had frank discussions with Russian prime minister Vladimir Putin when the pair met at the Olympics in Beijing, calling Russia's actions "disproportionate".President George W Bush told US TV he had frank discussions with Russian prime minister Vladimir Putin when the pair met at the Olympics in Beijing, calling Russia's actions "disproportionate".