Oil prices escalate fuelling global fears

Oil prices have moved closer to
recent highs as conflict in Libya intensified.

Brent crude futures rose $2.40 to
almost $118 a barrel, before falling back a dollar, while US light, sweet crude
rose $2.20 to about $101.70.

The increases followed news of an
air strike in Libya near an oil terminal in the east of the country.

Libya’s top oil official, Shokri
Ghanem, chairman of the National Oil Corporation, also said prices could reach
“$130 or more in the next month”.

He said that the country’s usual
output of 1.6 billion barrels-per-day had been reduced to less than 750,000
barrels by the conflict.

Saudi Arabia previously said it is
covering all of the extra demand not met by Libya.

The Libyan government has fought
back against the revolt in recent days, raising fears the country could be in
for a more protracted conflict.

There are also worries that the
Libyan air force may strike oil facilities in the rebel-held east, with the
idea of a no-fly zone still being debated.

The regime’s planes bombed
locations close to oil infrastructure on Wednesday as part of a failed attempt
to retake Brega in the east of the country.

“It’s hard to say if the
Libyan government is trying to target oil infrastructure in the east or whether
they’re just targeting rebel-held areas, but the market’s reacting to this threat
either way,” said Adny Lebow a trader at MF Global in New York.

Meanwhile, the boss of Shell said
oil-producing countries would do what was necessary to ensure stable prices.

“You will see short-term price
spikes but in the longer term, I think Opec have made it very clear how they
will operate,” Shell chief executive Peter Voser said.

The Organisation of Petroleum
Exporting Countries (Opec) is watching the situation closely, but does not
intend to call an emergency meeting yet, according to Wilson Pastor, oil
minister of Ecuador, an Opec member.

However, Mr Pastor said any rise in
oil prices above $120 would have an “important” effect on the world
economy.

 

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1 COMMENT

  1. HE HE HE .lol .how did ya like that 7 dollar a gallon gas rumor …..i laughed when they started calling .to tell me about it …but really expect to see a 30-40 cent increace on island any time now unless someone is price gouging

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