Oil higher as supply fears persist

2011-02-25 09:36

Singapore - Crude prices rose again on Friday afternoon in Asia as supply worries persisted due to escalating unrest in the oil-rich Middle East and North Africa.

New York's main contract, light sweet crude for April delivery, rose 36c to $97.64 per barrel.

Brent North Sea crude for April was up $1.26 at $112.62.

"At this rate it will not be long before prices revisit the highs above $140 seen in 2008," analysts at research house Capital Economics said in a market commentary.

"Given the pace at which markets are moving and events are unfolding in the Middle East and North Africa, we are of course extremely wary of making any strong calls on what happens next."

Prices dipped earlier in the day after the Opec oil cartel promised to boost output to make up for any production loss in revolt-hit Libya, but concerns mounted again in the afternoon.

World leaders on Friday were studying possible punitive measures against Moamer Kadhafi as the Libyan strongman's crackdown on a nationwide revolt grew more desperate.

Diplomats said they were studying a possible no-fly zone over Libya, as well as a travel ban and assets freeze against the Kadhafi family, amid mounting concern over the growing death toll.

Saudi Oil Minister Ali al-Naimi said on Tuesday that the Organisation of Petroleum Exporting Countries was prepared to meet any supply shortage caused by unrest in the Middle East and its members had sufficient spare capacity to do so.

The Opec kingpin also on Thursday reassured oil consumers that the nation would boost production to make up for any production lost in Libya, according to oil specialist Platts.

Investors were also monitoring the situation in neighbouring Bahrain, where thousands of protesters were staging a march in Manama and pressing an 11-day uprising against the monarchy, said Ong Yi Ling, investment analyst for Phillip Futures in Singapore.

"While Bahrain is not a major oil producer, it has close ties to Saudi Arabia, so it is important to the strategic balance of power in the Middle East," said Ong.