Brent oil price hits $108 on Libya fears

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GMT - 3 Hours Brent oil price hits $108 on Libya fears

Post by εﺓз• » ιη∂αġι яσ¢χ « • on Thu Sep 15, 2011 3:44 pm

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LONDON: Oil prices struck $108 on Tuesday, as Libyan production was hit by violent protests and concerns grew over spreading unrest in the strategic crude-producing Middle East and North Africa region.

In early morning trade, Brent North Sea crude for delivery in April surged to $108.57 per barrel, the highest level since September 2008, before pulling back to $107.28, up $1.54 from Monday's closing level.

New York's main contract, light sweet crude for March, known as West Texas Intermediate, hit $94.49 and later stood at $93.50, up $7.30 from Friday. US markets were shut on Monday for a public holiday.

"The market remains very jittery, trading on sentiment and rumour, while fears for Libya are added by concerns of unrest spreading to other states like Algeria and even Saudi Arabia -- though this is unlikely," said VTB Capital oil analyst Andrey Kryuchenkov.

"Until tensions calm down in the Middle East and North Africa, we are likely to remain well underpinned," he added.

"The market is reacting to violence in the Middle East... and not to fundamentals," United Arab Emirates energy minister Mohammad bin Dhaen al-Hamli told reporters, on the sidelines of a producer-consumer meeting in the Saudi capital Riyadh on Tuesday.

"We (OPEC) are watching the situation and ready to act when necessary," said Hamli, who declined to be drawn on when it will be time for the Organization of Petroleum Exporting Countries to intervene.

Hamli said OPEC was concerned about the developments in Libya "because it is a member of OPEC and a major oil producer."

The UN's human rights chief called Tuesday for an international probe into violence used by Libyan authorities to suppress protests, saying that such "unconscionable" violations must end immediately.

However, Libyan television dismissed as "lies" allegations that security forces are massacring protesters, after embattled leader Moamer Kadhafi spoke publicly for the first time since the revolt began.

Witnesses in the Libyan capital Tripoli had reported "massacres" in certain neighbourhoods after the state channel had announced security forces were assaulting "dens of terrorists."

"The unrest in Libya is particularly worrying for a number of reasons, including the regime's apparent willingness to use extreme violence against the opposition," said Capital Economics analyst Julian Jessop.

"On top of this, Libya is the first major oil exporter to be engulfed by the crisis and the first to see any significant disruption to oil production.

"Much of Libya's oil industry is offshore and should be relatively easy for government forces to secure.

"But one major oilfield has already been shut down by industrial action in support of the protests and others have been threatened."

Libya is Africa's fourth largest crude producer after Nigeria, Algeria and Angola, with production of 1.8 million barrels per day and estimated reserves of 42 billion barrels.

The OPEC member exports most of its oil to European countries, including Italy, Germany, Spain and France.

German group Wintershall, a unit of chemical giant BASF began on Monday to pull 130 of its staff and their famililes out of Libya, it told Dow Jones Newswires, without giving details on the evacuees' nationalities.

Wintershall operates eight oil fields in the country and employs a total of 400 people there, most of whom are Libyans.

The company said its daily production of 100,000 barrels per day would be reduced, but that a small group of core workers would remain on site. (AFP)
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