Libya warns of oil at $130/barrel
Brent crude rose back close to two-and-a-half year highs on Wednesday as Libya warned of higher oil prices due to the crisis and its government forces fought rebels in the country's oil-rich east.Updated: Mar 03, 2011 01:08 IST
Brent crude rose back close to two-and-a-half year highs on Wednesday as Libya warned of higher oil prices due to the crisis and its government forces fought rebels in the country's oil-rich east.
Brent crude for April edged up 4 cents to $115.45 a barrel at 1229 GMT against the recent peak of $119.79 hit on February 24. US April crude futures rose by 31 cents to $99.94 a barrel.
Shokri Ghanem, chairman of Libya's National Oil Corporation, said Libya's troubles had created its worst energy crisis in decades and supply cuts to world markets could push oil above $130 a barrel in the next month if troubles persist.
Ghanem said crude oil output had dropped to 700,000-750,000 barrels per day (bpd), from a pre-crisis 1.6 million bpd, after the flight of most of the foreign workers who make up about 10% of the Libyan energy industry's labour forces.
"The question is what will be the outcome over the next few days - will there be a full stoppage as the evacuation of personnel continues?" said Harry Tchilinguirian, head, commodity market strategy, BNP Paribas. "What's at stake is the number of barrels in the Middle East."
"Oil prices are subject to the ebb and flow of news out of the Middle East ... there's a good chance of Brent rising to $120 over the next couple of days," said Michael Hewson, a market analyst at CMC markets.
Last week Brent crude futures rallied to 2-1/2-year peak over $118 on disrupted supply from Libya, but fell back as a boost in Saudi Arabian output was expected to fill the gap.
"Conventional bets on supply and demand... are off. The market's focus is on the bigger picture," said Tchilinguirian.