The price of oil climbed about 2 percent Monday as striking oil workers in Norway forced the industry to prepare for a historic shutdown in the North Sea.
Norway's oil fields, which produce more than 3.8 million barrels of oil and natural gas per day, could shut down after 6 p.m. EDT if the industry doesn't resolve a dispute over employee retirement benefits. Workers have been on strike since June 24, and the country's oil industry said a lockout would begin at midnight.
Many analysts and traders expect the Norwegian government to intervene at the last minute and keep the oil and gas flowing. Government-owned Statoil ASA expects to lose $85.5 million per day if the strike continues.
"Right now everyone's pricing in the possibility that there could be some oil supply off the market," due to the strike, said Gene McGillian, a broker and oil analyst at Tradition Energy.
But financial pressures should force both sides to find common ground, independent analyst and trader Stephen Schork said. "There's a lot of skepticism about this strike," Schork said. "This isn't Libya" where rebels forced oil fields to close for several months last year. He noted that the pension dispute is a far less serious matter.
The Norwegian Oil Industry Association said the country has never experienced a total shutdown of its oil fields. A lockout would affect about 6,500 workers.
Any production stoppage would seriously crimp European oil supplies, cutting off a major source of crude as the European Union officially begins an embargo of Iranian oil. Norway exports most of its crude to the United Kingdom, the Netherlands, France and Germany. American refineries also buy a small amount of oil from Norway.
Benchmark U.S. crude rose $1.54 to end the day at $85.99 per barrel in New York. Brent crude, which comes from the North Sea and sets the price for oil imported into the U.S., added $2.13 to finish at $100.32 per barrel in London.
Statoil shares were flat, down 4 cents to $23.23 in afternoon trading.
Meanwhile, gasoline pump prices rose 2.4 cents over the weekend to a national average of $3.38 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has risen by an average of nearly 6 cents since last week, but it's still about 23 cents cheaper than the same time last year.
In other futures trading, heating oil rose 4 cents to end at $2.75 per gallon and wholesale gasoline rose by 4 cents to finish at $2.76 per gallon. Natural gas rose 11 cents to finish at $2.88 per 1,000 cubic feet.
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