Monday, March 7, 2011

Oil jumps to near $107 amid fierce Libya fighting

Oil prices climbed to near $106 a barrel Monday as intense fighting between Libyan government forces and rebels appeared to be turning into a civil war and raised the prospect of a prolonged cut in crude exports from the OPEC nation.

By early afternoon in Europe, benchmark crude for April delivery was up $2.25 to $106.67 a barrel, the highest since September 2008, in electronic trading on the New York Mercantile Exchange. The contract had gained $2.51 to settle at $104.42 a barrel on Friday.

In London, Brent crude for April delivery was up $1.80 to $117.77 a barrel on the ICE Futures exchange.

Over the weekend, supporters and opponents of Libyan leader Moammar Gadhafi fought in several cities, heightening fears that the country is headed for a protracted conflict. Libya's oil output has fallen by at least 1 million barrels per day from 1.6 million since the uprising began last month.

Investors also are concerned violent protests and political upheaval could intensify in the Middle East, where Iran, Iraq, the United Arab Emirates, Kuwait, Bahrain, Qatar, Oman and Saudi Arabia have more than 60 percent of the world's proven oil reserves.

"It is essentially the fear of the unrest spreading across the entire region which is pushing oil prices up," said Commerzbank in Frankfurt. "Northern Africa and the Middle East produce more than one-third of the global supply of crude oil." (read more)