LONDON – Oil prices eased on Friday after the Norwegian government ordered an end to a strike that had threatened to halt output from the world's third biggest oil exporter.
News that shipments from southern Iraq were getting back up to strength added to the perception that the market is adequately supplied with crude.
U.S. light crude fell 36 cents to $37.57 a barrel on the New York Mercantile Exchange (search), reversing modest gains the previous day. London Brent crude shed 30 cents to $35.00.
Prices were eroded after the Norwegian Labor Ministry said the government had ordered an end to an eight-day old oil and gas strike on Friday.
Government intervention had been widely expected after employers raised the stakes by threatening to lock out almost 3,000 workers from offshore platforms from Monday night.
The strike, over pensions and job security, had already halted 375,000 barrels per day of Norway's three million bpd output and the lockout would have brought exports to a virtual standstill.
Unions, which recall bitterly that some workers were sacked in wildcat strikes in 1990 after the government similarly ordered workers back to offshore platforms, said they would go back to work.
"We had aggressive statements from the companies saying they would lock out the oil workers and basically they had upped the ante so much, the government was expected to step in," said Deborah White of S G Commodities. "The only thing we didn't know until now was the day."
At the same time, in Iraq, exports from the southern terminals were expected to return to full rates of 1.8 million barrels per day later on Friday, an Iraqi official said.
Southern oil flows were for now running at 1.3 million bpd, around 70 percent of normal levels, as they gradually recover following disruption caused by sabotage.
Recurrent attacks on Iraq's oil export facilities have held Iraq's oil exports well below its total pre-war export capacity of 2.2 million bpd. Exports were at a halt for six days before resuming on Monday.
Iraq also began pumping oil from its northern fields on Wednesday at a reduced rate of 200,000 bpd after repairing an export pipeline sabotaged three weeks ago.
The Organization of the Petroleum Exporting Countries (search), led by Saudi Arabia, has meanwhile been pumping at close to capacity.
The cartel meets again on July 21 to consider policy, but its president this week said that it was expected in any case to go ahead with a quota increase of 500,000 bpd from August.
That will follow a two million bpd increase from July and is in addition to extra volumes from Saudi Arabia well above the kingdom's official OPEC quota.
It all adds up to a market adequately supplied with crude oil, analysts say, although product inventories remain tight as a result of bottlenecks in the world refining system.