LONDON — World oil prices advanced on Tuesday despite OPEC kingpin Saudi Arabia’s pledge to ensure sufficient supplies to cover Libya’s production shortfall.
Brent North Sea crude for delivery in April rose 67 cents to $112.47 per barrel.
New York’s light sweet crude for April, known as West Texas Intermediate (WTI), gained 35 cents to $97.32.
Fears about supply disruption due to a wave of unrest in Libya and other countries in the oil-rich Middle East sent Brent soaring close to $120 last week.
Saudi Arabia, OPEC’s largest producer, said on Monday it was committed to the stability of the oil market after Libya’s crude production dropped due to the unrest there.
The Saudi government said the cabinet had met and discussed the protests shaking Libya “and their repercussion on oil production in that country.”
Saudi Arabia “is committed to the stability of the market” and to ensuring that oil supplies remain available, a statement said, adding that the kingdom hoped Libya’s production returns to normal soon.
But Chen Xin Yi, commodities analyst for Barclays Capital, said: “While news that Saudi Arabia is increasing its crude output to more than nine million barrels per day … helped ease concerns about short term supply, the crude oil produced is not an exact substitute for Libyan’s crude.”
Libya produces a light, sweet crude highly prized by the market.
Libya’s opposition forces, in control of the country’s major oil installations, said Monday they were resuming oil exports with the expected departure of a tanker for China.
It will be the first cargo of crude to sail from Libya since February 19, after security forces began a crackdown on anti-regime protesters in the east.
On February 22, Saudi Oil Minister Ali al-Naimi said Riyadh would compensate for any oil supply problems caused by unrest in the Middle East, but added there was no current shortage.
Saudi Arabia pumps around 8.4 million barrels of oil per day but Naimi said the kingdom still had spare capacity of another four million.
Sucden analyst Myrto Sokou told AFP that traders were still concerned about the potential for further unrest in the Middle East.
“The tensions across the Middle East and North Africa have fairly eased, as oil market participants have digested the news about serious oil supply disruptions in Libya that drove crude oil prices above $100,” said Sokou.
“Saudi Arabia’s move to increase oil production definitely provided further support to the oil market.
“However, all eyes remain on (the region) … regarding potential escalating tensions across the Middle East, and more specifically Saudi Arabia, that could drive crude oil prices even higher — towards $150 per barrel.”