Oil prices spiked on Wednesday…
While geopolitical risk definitely remains…
As the Norwegian oil industry’s deadline for shutting down their entire oil production operations approached, the government finally stepped in to take charge of the situation.
Just 30 minutes before the oil companies were due to lock out all workers from the oil wells and begin the process which would see all oil production in the world’s eighth largest oil exporter halted, the labour minister Hanne Bjurstrom summoned both sides to her office to resolve the dispute.
In a show of force she sent the dispute to binding arbitration to be officially settled at a later date, and ordered the offshore workers back to their drilling platforms in the North Sea. The intervention ended the threat which had oil traders on edge, and could have led to a large increase in world oil prices. Brent crude prices had risen $2 dollars on Monday, but as the government took action and the deadline passed without incident the price dropped back down by $1.50.
The workers started their strike back on the 24th of June, and with little progress made, it is thought that the oil industry used the threat of a shutdown, just to force the government to step in and stop the strike.
The result has been viewed as a victory for the oil industry.
Leif Sande, the president of IndustriEnergi, the largest of the unions on strike, complained that “the industry asked for compulsory arbitration and got it. That is not according to democratic rules.”
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…