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Oil jumps on Mideast unrest

Mar 01 2011 18:59 Reuters

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New York - Brent crude oil prices pushed back above $114 a barrel on Tuesday as the potential supply disruptions and unrest in the Middle East and North Africa kept investors on edge.

Clashes between opposition supporters and Iran's security forces in Tehran reported by an opposition website added to investor concerns about the security of oil supplies in the region.

A report in an Egyptian newspaper that the Saudi Arabia had sent tanks to Bahrain to try to quell protests there roiled markets earlier, prompting a Saudi Arabian defense ministry official to deny the report.

With Muammar Gaddafi remaining defiant against opposition, the United States said Libya faced the danger of civil war if Gaddafi refuses to quit.

Brent crude futures for April rose $1.75 to $113.55 a barrel at 11:20 a.m. EST (1620 GMT), after earlier reaching $114.35 intraday. US crude rose $1.30 to $98.27 a barrel.

Brent's premium to its US counterpart stretched above $15 a barrel, but remained below last week's record $16.91. Brent's price rise has been stronger because Europe is more vulnerable to supply disruptions from Libya and the region.

"We're now at the point where a $1-$2 move is just a normal fluctuation," said Peter Beutel, president at Cameron Hanover in New Canaan, Connecticut.

"At this point, we're rife with rumors and when any emerge from the 'Petroleum Gulf' we're going to see a jump. If there's some truth in it the move will be $5-$6 rather than $1-$2."

In Oman, a small oil producer in the region, the army fired in the air, wounding one person, as it moved to disperse protesters near the northern port of Sohar.

Libya's National Oil Corporation chairman, Shokri Ghanem, said its oil installations were undamaged, although output was halved because of departures by oil workers.

Oil spike could hit growth

US stocks traded lower as the jump in oil prices renewed fears of hampered economic activity, offsetting a positive reading on manufacturing.

The dollar hit its lowest in three and a half months versus a currency basket ahead of Federal Reserve Chairman Ben Bernanke's appearance before Congress.

Bernanke said the recent surge in oil prices is unlikely to have a big impact on the US economy, but could lead to weaker growth and higher inflation if sustained.

Oil investors awaited the latest US weekly oil inventory data from industry group American Petroleum Institute due at 4:30 p.m. EST (1630 GMT) on Tuesday.

Economists polled by Reuters expect an increase in stockpiles on higher imports.

wall street  |  markets  |  oil
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