Oil soars close to $120 on Libya fears

By Agence France-Presse
Thursday, February 24, 2011 16:27 EDT
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LONDON – Oil prices rocketed close to $120 on Thursday, levels unseen since mid-2008, as growing instability in Libya stoked supply jitters across the Middle East and beyond.

Brent North Sea crude for delivery in April rallied as high as $119.79 per barrel, the highest since August 22, 2008. It breached $110 easily on Wednesday as Libya was gripped by a fresh wave of violence and other protests continued across the Middle East.

New York’s light sweet crude for April, known as West Texas Intermediate (WTI), jumped to $103.41, a level last seen in late September 2008.

“Oil prices continued to surge higher as events in Libya dominate the headlines and the oil market,” said Westhouse Securities analyst David Hart.

“The country’s output of high-quality crude is being significantly impacted due to the exodus of foreign personnel.”

The oil market has spiked higher this week as foreign energy companies have halted or cut output from Libya as a result of the violence.

Spain’s biggest oil company, Repsol, stopped production there earlier this week as anti-government protests spread.

Italy’s ENI, the biggest foreign energy major in Libya, said Thursday that it has cut oil production in the country by over 50 percent due to the ongoing unrest while British giant BP evacuated all expatriate staff from the restive country.

“Crude prices held up over the past week, underpinned by persistent geopolitical concerns amid ongoing tensions in the Middle East and North Africa,” said VTB Capital commodities analyst Andrey Kruchenkov.

“Violence in Libya escalated with the country’s Eastern provinces allegedly (escaping from) government control and reports of shutting down production capacity by oil majors.”

In later afternoon deals on Thursday, Brent stood at $113.94, up $2.69 from Wednesday’s closing level, while New York was $1.31 higher at $99.41 per barrel.

Libyan leader Moamer Kadhafi spoke Thursday to the elders of a town west of the capital where he said a drug-crazed mob of youths spurred on by Al-Qaeda had killed four policemen, urging them to bring their children under control.

Speaking on state television by phone from an undisclosed location, the embattled 68-year-old former colonel fretted about unrest in Az-Zawiyah, 50 kilometres (30 miles) west of Tripoli as the battle to unseat him began to encircle the capital.

Al-Jazeera television reported heavy fighting there between pro- and anti-government forces and said there had been an undetermined number of casualties.

“Increasing unrest in North Africa and the Middle East has been a key driver of the latest spike (in prices),” said Shane Oliver, chief economist at AMP Capital Investors.

He said in a research note that Libya accounts for 1.8 million barrels a day of oil production, while Algeria, which has also seen protests, accounts for 2.1 million barrels.

Libya has Africa’s largest oil reserves, is the continent’s fourth largest producer and is a member of the Organisation of the Petroleum Exporting Countries (OPEC), the cartel that produces about 40 percent of global supplies.

Agence France-Presse
Agence France-Presse
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  • http://www.rawstory.com/ hounddogg

    oil falls to 96$ on unconfirmed rumor Gaddafi shot dead by guard…

  • Guest

    NOW…can the U.S. start getting SERIOUS about alternative automobile “fuels”?!

    Correct me if I’m at a loss here but why isn’t oil based on “Supply & Demand” as opposed to fear and speculation of POSSIBLE circumstances???

  • parrots_abound

    Is Libya even in the top ten oil exporters to America?

    I don’t think so.

  • Anonymous

    Just a couple days back I heard on CNN that saudi arabia can pick up the slack…. what gives?

  • Anonymous

    Nope they are not but I guess we will hear from dumb asses now saying drill here drill now but I’m getting tired of explaining to them that ALL oil found here goes on the world market. It’s not like if one finds crude in there back yard they can call it Jims crude and put it on the back of their pickup and sell it at the curb lol.

  • Jeebus

    $96? Don’t you mean $36? We are speculating after all.

  • Anonymous

    it doesn’t matter, oil is traded on the world market so without Libya’s million or so barrels a day the world demand is greater than the supply, or so they say.

  • Anonymous

    ’cause wall street can’t make billions based on normal economic principles like S&D.

  • http://www.rawstory.com/ Stumptownhero

    ONE MORE TIME $120 pb is NOT, I repeat NOT, the actual price of oil. This is the SPOT market price. The volume of oil delivered on this price accounts for less than 20% of the oil consumed on an annual basis. The vast majority of oil is sold on long term contracts and the big companies have their OWN wells. This price is the price paid by companies (like airlines) who do not have their own supplies is has next to NOTHING to do with the production cost of gasoline!

    The fact that governments allow gas companies to gouge the consumer when their ACTUAL costs remain constant is the biggest consumer rip off in modern times.

  • kiboshki

    And it’s probably the only reason that civilization hadn’t completely abandoned fossil fuels by 15 or 20 years ago.

  • Anonymous

    Perhaps you meant to say that consumers are allowing themselves to be gouged by oil companies because they have not made the necessary and proper investments in lower energy usage.

    You are no different from the drug addict who gets nervous when the dealer on your street gets busted.

    Get it straight: addicts are in no position to dictate terms to their dealer. If you are bummed out at the price of oil, well that is only because you went out and got yourself addicted to it.

    If we were not addicted to oil then nobody would give a fuck about any of the shit happening in the arab world.

  • Mr. Neutron

    If oil prices were based on “Supply & Demand” the US wouldn’t be spending $100′s of billion per year to keep military bases in the Middle East, or be training the “security forces” of dictators like the Saudi Arabian “king”, or have a global navy securing oil shipping lanes and a global military securing oil pipelines.

    We’d just be paying $200/barrel for crude oil, or whatever price foreign Suppliers thought they could get away with without crashing the global economy, and be driving small cars like the Japanese. And next year, the price would go up another $10/barrel. And $10 the year after that.

    Of course, the 8 million barrels/day of American produced crude would be sold for $20/barrel to Americans, because a good American corporation like Exxon-Mobil wouldn’t screw American consumers just because some Arab dictator was charging $220/barrel.

  • http://www.rawstory.com/ Stumptownhero

    Why dog me when all I’m trying to do is EDUCATE RAW readers?

    Do you know what I drive or how I live? No!

    Do you know what I advise my clients or friends about energy ues/conservation? No!

    You are RIGHT when you say if we were not addicted but the POINT you missed is that we are being robbed blind which prevents us from investing in more efficient modes of transportation and or energy production ie kicking the habit!

  • http://pulse.yahoo.com/_N6BJ56PKHQMYMIH3LYCOQC233I Sidd

    I saw gas prices go up 10 cents/gallon today. What will happen tomorrow?

  • Anonymous

    It looks like we’d better get in there and end this nonsense, else we’re gonna pay through the nostrils. 20¢ a gal today alone.

  • Anonymous

    And someday, maybe we’ll get moral and end our sleeping in bed with despots, thugs, insaniacs, liars, cheaters, and various and sundry other enemies of the people to get our goddamn oil — but don’t hold your breath. There are too many Cheneys in the world.

    Really, I must now take my pills.

  • Anonymous

    These skyrocketing oil prices are fueled by speculators, specifically oil futures speculators who are betting that oil prices will go up, and voila, their speculating activity drives up the price of oil. IOW, supply and demand right now for oil is not a factor, but some very wealthy speculators are “guessing” that some of this turmoil roiling the Middle East and North Africa will lead to less oil while demand will stay the same. Ergo, the price of oil skyrockets. This happened in 2008, when the Bush/Cheney administration refused to police the oil futures speculators, and it’s happening again.

  • http://reconstitution.us/rcnew Jolly Roger (Plutocrap)

    If we hadn’t had about 20 of the last 30 years under Rushpubliscums, we might have made progress towards self-sufficiency by now.

    Thank you so much, Saint Ronnie.

  • ProgressiveInNewYork

    Profits are up. Especially big oil.
    Bonuses are obscene.
    The people that brought the financial market down are still free.

    But according to Republicans, “Unions are trying to destroy the middle class.” Christie

    If “Corporations” are persons, why don’t they pay their share of taxes? What percentage do you pay? Bank of America, manages 2.2 trillion(?) and pays a tax rate of 14% …14%
    Big Oil gets billions in subsidies, our money.

    Why is the right out to destroy the middle class?

  • http://profiles.yahoo.com/u/JOFFWKUYN3IGG7UMLLVL5EPAJ4 Egret

    The gas at the pumps didn’t cost $120 a barrel, so why did the price just jet up $0.25 a gallon? These companies are bleeding us dry, and will continue to do so until there is fundamental change in this country.

  • Mr. Neutron

    Libya was just another Middle East monarchy (King Idris) where the royals steal the vast oil wealth of the country and cooperate with the West (like Saudi Arabia and Kuwait) when Gaddafi and a small group of junior military officers staged a bloodless coup while the King was away in Turkey getting medical treatment. As a teenager, Gaddafi was an admirer of Egyptian President Gamal Abdel Nasser and his Arab socialist and nationalist ideology. At 24, Gaddafi took part in anti-Israel demonstrations during the 1956 Suez Crisis.

    Gaddafi kicked the US out of Wheelus Air Force base in 1970 (it is now Mitiga International Airport). The “West” never liked Gaddafi, since puppet dictators and military bases was their main concern with “the people of Free Libya”, and he took away both. The 6.5 million people of Libya are never on Washington’s radar until the oil supplies to the West are “threatened”. When Iran blew up PanAm Flight 103 over Lockerbie in revenge for the USS Vincennes destroying Iran Air 655 (killing 290 passengers and crew, including 66 children), the West found a convenient weak scapegoat in Gaddafi, forcing him to “confess” and “pay amends” to get access to European markets.

    Real history is more interesting than TV history.

  • Anonymous

    So, the next time there are riots in England, does that enable other countries to invade and grab the queen, perhaps cook up a little heart-attack or “stroke”, leaving the country in disarray, weak, for some other invasion or domination? Like, by the Muslim Retarded-hood?

    This is another cooked-up invasion in the style of Saddam Hussein, with the result being a wrecked country.

    This is insanity. Illegal. Immoral. Makes No sense. O-Stupid, the globalists, Chinky-com leaders, and the UN have the black hat on, in this case, if looked at objectively.

    And let’s not get started on China, who by this reasoning, should have already been invaded. Where is the morality? This nation-building MUST stop.

  • DesertSun59

    We’re still beholden to the Middle East, even as they work themselves out of the clutches of their dictators.

    And Koch Industries couldn’t be happier.

  • Anonymous

    There they go again, speculators on Wall Street, oil companies going to get richer working class about to get poorer. Same old shit.

  • Johnny Warbucks

    The boys in Wall Street casino must be licking their chops and throwing their dice across that game table.

  • Johnny Warbucks

    Speculating, yes. Giving away the house, no. After all, the game is not rigged for nothing.

  • Johnny Warbucks

    Oh, yeah. Cause that worked so well in Iraq…

  • Johnny Warbucks

    If this is what they’re doing to us, imagine what they’re doing to the Arabs.