Oil prices hit multi-year highs amid Libya unrest

By Agence France-Presse
Wednesday, February 23, 2011 15:29 EDT
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NEW YORK — Oil sold in New York crossed the symbolic $100 a barrel level Wednesday, hitting prices not seen since 2008, amid fears over supplies from Libya.

As traders panicked that political chaos could spread further in the Middle East, the main US contract reached $100 a barrel for the first time since October 2008.

London’s main Brent contract — which is more sensitive to Middle East unrest thanks to Europe’s greater dependence on oil from the region — surged past $110 a barrel.

With foreign oil workers fleeing Libya and rumors swirling that Moamer Kadhafi may sabotage pipelines, analysts raised the prospect of a bonafide oil crisis.

“If Libya and Algeria were to halt oil production together, prices could peak above US$220,” Michael Lo of Nomura told clients in a note.

He warned that the oil cartel OPEC could see its production capacity cut to 2.1 million barrels a day, levels seen during the 1990-91 Gulf War, when prices rose to $147 a barrel.

With US prices up by around $10 in the last two days, consumers can expect to see higher prices at the pump soon.

The recent increases could translate into a 25 cent increase in gasoline prices at the pump, based on averages produced by Moody’s.

With much of the global economy still ailing from the financial crisis, many fear such sharply higher oil prices could smother the recovery and send many nations spiraling back into recession.

“A one-penny increase in the price of a gallon of gasoline acts as a sales tax on consumers at the rate of 1.2 billion dollars a year,” said David Kotok of Cumberland Advisors, quoting research from Naroff Economic Advisors.

“This is nowhere near over. We are watching a ‘sea change’ occur among one tenth of the world?s population,” he said warning the turmoil could cause a double-dip recession in the United States.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
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  • Don Corleone

    Send some of my boys to take care of the problem in Libya.

    Not that gas won’t go up anyway, because it will regardless of what happens in Libya, the moon, or if a rat farts. Doesn’t matter.
    I could still send the boys in though.

  • Guest

    A minor inconvenience to the wealthy; another burden upon the working poor, unemployed, or seniors on Social Security.

  • Mein Furor

    Fuck the oil speculators. Oil prices have been disengaged from actual supply and demand dynamics for years, ever since before the absurdly criminal run-up several years ago. That price spike had almost nothing to do with actual supply and demand, and neither does this one.

    Another spike is going to increase inflation, stall any kind of economic recovery, and increase worldwide hunger rates by making food more expensive. To think that this is all caused by Wall Street traders and giant oil conglomerates is intolerable. Commodity speculators are causing more harm to the world community than good. They may have had a legitimate purpose sometime in the past, but not anymore. They have abused their role in society.

    When oil companies and commodity traders are making undeserved, windfall profits at the expense of economic health and world hunger, the system is broken. When are we going to wake up to the fact that the financial markets have become an albatross around the neck of the world community?

  • Guest

    WELL SAID, Mein Furor! When indeed?