Prices down, supplies down, prices back up

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'. WTI fell below $70/bbl in early June on reports that Iran was considering a proposal from the EU and the UN to resolve the dispute over Tehran's plans to develop nuclear power. Sellers took further encouragement from the news that the Iraqi leader of al‐Qaida, Abu Musab al‐Zarqawi, had been killed. July WTI futures went down as far as $69.10/bbl. The euphoria proved to be short‐lived. Within a short time, Iran announced that it was to resume the enrichment of uranium, whilst in Iraq, there was no sign whatever that the killing of one terrorist leader was going to bring about peace there. During the month of June, an estimated 1,500 people were killed in Baghdad alone. Attacks on road tankers caused the suspension of exports of heavy fuel oil, which is produced to excess by Iraq's refining industry. Lacking anywhere to store the surplus fuel oil, the government ordered what were described as 'large quantities' to be incinerated. The one piece of good news from Iraq was the reopening of the export pipeline from Kirkuk to Ceyhan for the first time since January. Throughput was reported in late June at 325,000 bpd. Even here, though, the situation was not entirely without its troubles. The state marketing company, SOMO, received disappointing bids for the oil it was offering for sale at Ceyhan.