Brent oil price heads back towards $100 as Norway production faces shutdown

The price of European Brent crude oil opened Monday’s trading session back nearer to $100 a barrel, lifted slightly by news that Norway faces total shutdown in oil and gas production after talks over pensions broke down for a third time over the weekend.

Latest Brent Oil Price

In London, Brent crude oil futures for August 2012 delivery was trading at $98.97 at 11.32 GMT this morning on the ICE Futures Exchange.

Norway Production Concerns

Norway, the world’s fifth largest oil exporter, has already seen its oil production cut by 13 percent since strikes began on 24 June. OLF estimates this has cost Norway 2.9 billion kroner in lost production.

Jan Hodneland, chief negotiator at the Norwegian Oil Industry Association said talks had failed despite over 13 hours of negotiations.

OLF said it now sees no option other than to lock out all 6,515 oil and gas workers covered by offshore pay agreements from their workplace from Tuesday.

The government possesses emergency powers giving it the right to force an end to a strike if it believes that safety is being compromised or national interests are being harmed.

“Oil company employees have an average annual income of 1m Norwegian kroner and a retirement age of 65. This already makes them Norway’s pension winners. They’ve nevertheless opted to use their power to win even better terms,” said Mr Hodneland.

“We’re living longer, so we’ve also got to work longer,” he added.

State-owned energy company Statoil, a member of OLF, said the lockout “will halt all production” on Norway’s continental shelf, where about 50 companies operate, including BP and Royal Dutch Shell.

Euro Financial Crisis

Meanwhile, the financial crisis that is engulfing the west continues to hold back investors and traders who fear that oil demand will drop, taking Brent crude once again lower.

Borrowing rates for Spain and Italy rose once again to distressing levels this morning because investors think more needs to be done to resolve Europe’s financial crisis.

It’s possible that the situation in Norway could tip Brent oil prices back over $100 a barrel in the next day or so, however the short term outlook for oil prices remains on the downside. Only a sever problem in the Strait of Hormuz could change the outlook this summer…

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Brent oil price heads back towards $100 as Norway production faces shutdown