• 10 tips to find bargains

    Susan Erasmus gives advice on how bargain hunters can get the most bang for their buck.

  • Inside Labour

    Labour's bitter breaches need to be seen in historical context, says Terry Bell.

  • Rich getting richer

    Economists differ on how to tackle the chasm between rich and poor, says Leopold Scholtz.

See More

Oil at new high on Libyan worries

Feb 23 2011 06:29 Reuters

Related Articles

Oil passes $107 on violence in Libya, Bahrain

Libyan turmoil pushes oil price higher

Oil rises as Libyan tensions escalate

Oil around $86 on Middle East protests

Oil above $85 amid Middle Est tensions

Oil prices supported by Middle East tensions


Singapore - US crude futures climbed to a  two-and-a-half year peak on Wednesday on concern that unrest in Libya could spread to other top oil producers in the region and cut more output.

Violent clashes in Libya have resulted in at last three oil companies halting output in Africa's third-largest producer. Libya pumps 1.6 million barrels per day (bpd), or nearly 2% of global supply.

The disruptions mark the first reduction in oil supply stemming from a wave of protests that have swept through the oil-producing Middle East and North Africa. Investors fear for the potential impact on the flow of oil from top exporter Saudi Arabia if it suffers similar unrest.

US crude rose as high as $96.08 a barrel, the highest level since October 2008. By 05:55, the contract had trimmed gains to trade at $95.70, up 28 cents on the day.

Brent crude rose 78 cents to $106.56 a barrel. On Monday, Brent hit a two-and-a-half year high of $108.70.

"Even if Libya completely shuts down, there isn't a supply issue. But the (US crude) could go to $100, given the potential for this contagion to spread to Saudi Arabia," said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.

To date, protests in Saudi have been low key. But majority Shi'ites in neighbouring Bahrain are protesting against the Sunni government and there is concern this could spill over to the Shi'ite minority living in Saudi Arabia's oil-producing eastern province.

A pipeline pumping Libyan gas to Italy was also closed, and operations at Libya's export terminal operations disrupted. Libyan leader Muammar Gaddafi has refused to step aside despite the growing revolt and threatened tougher action against protesters in a defiant speech on Tuesday.

International Energy Agency (IEA) chief economist Fatih Birol said on Tuesday that oil prices were in the danger zone and could rise further if turmoil continues in the Middle East.

"The global economy is more fragile now than it was in 2008. Growth has been driven by stimulus packages and austerity measures. I don't see it being able to absorb a rise to $140 like it did two years ago," Barratt said.

Brent crude has risen more than 13% so far this year. US crude is up over 2% on the year, but is over $50 below its 2008 high of $147.27.

"(Brent) prices have broken through the $105 resistance, and if it breaks $110, it could easily move to $120," said Ken Hasegawa, a commodity derivatives manager at Newedge brokerage in Tokyo.

No more crude from Saudi

Top exporter Saudi Arabia on Tuesday stopped short of pouring more oil on to markets, telling visiting consumer nations prices were driven by fear.

The kingdom could ramp up its oil production enough within one month to replace all of Libya's crude exports if growing strife in the African nation cuts off its oil shipments, a senior US government energy official said on Tuesday.

Saudi Arabia supplies around 10% of the world's oil, but also holds most of the world's spare capacity.

It is the only producer able to respond quickly with large volumes of oil to compensate for a serious supply outage.

IEA member states would consider releasing oil from their emergency stocks if supplies were disrupted as a result of continuing turmoil in the Middle East, Birol said.

The IEA is adviser to 28 industrialised nations on energy policy.

Asian stocks fell on Wednesday, following Wall Street's worst performance since August on concerns over the turmoil in Libya.

muammar gaddafi  |  libya  |  middle east  |  oil



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

10 most expensive cars In the world

This is car porn at its best!


Luxury living

Seven of the most expensive children's toys ever made
5 millionaires turned murderers
The youngest billionaires in the world and how they made it
Watch: Flying first class has never been this luxurious!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How do you see your boss? He/sheis:

Previous results · Suggest a vote