Oil price soars on fears for BP Georgia pipeline

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Crude was up by $1.19 to $116.39 a barrel in New York. It rose $1.81 to $115.14 a barrel in London.
The rally followed sharp falls on Friday and came as Russia continued its military action against Georgia, a vital supply route for oil from the Caspian Sea and central Asia to Europe.

The conflict over the separatist region of South Ossetia has also sounded alarm bells at BP, the largest of more than 100 British companies operating in Georgia.

The former Soviet republic claimed Russian jets launched unsuccessful bombing raids on its main Baku-Tbilisi-Ceyhan pipeline, raising fears Moscow was moving to increase its stranglehold on oil supplies to Europe.

BP owns a 30% stake in the pipeline, which avoids Russia by carrying oil from the Caspian Sea to the west via Baku in Azerbaijan, the Georgian capital of Tbilisi and Turkish Mediterranean port of Ceyhan.

At 1109 miles long, it is the second-largest pipeline in the world and is capable of transporting 1.2 million barrels of oil a day, or 1% of global supply.

Local reports in Georgia counted 51 unsuccessful missile strikes on a pressure vent on Saturday although BP said it was not aware of any such move.

The BTC pipeline is already out of action after a blast last week in eastern Turkey for which Kurdish separatists claimed responsibility.
BP is embroiled in a bitter dispute for control of TNK-BP, its joint venture with four Russian billionaires. Chief executive Robert Dudley was last month forced into hiding amid claims of harassment and intimidation and finance director Jason Owen stepped down last week.

Oil prices fell to a 14-week low on Friday despite the simmering conflict but there are now growing fears of another spike.

David Moore of the Commonwealth Bank of Australia said: "I think 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.

"I think there is also some degree of a technical rebound after oil's sharp fall on Friday."
Today's rise in prices came just days after think tank Chatham House warned an oil supply crunch could hit the world in five years and drive up prices to more than $200 a barrel.