Oil soars over 8% on Libya's supply disruption
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Traders work in the crude oil options pit at the New York Mercantile Exchange on February 22, 2011 in New York City. Oil prices leapt five percent today as the unrest in Libya has sparked fears that Middle Eastern turmoil could affect oil production. Oil topped as high as $98 a barrel earlier in the day. [CFP] |
U.S. crude oil price soared over 8 percent on Tuesday as unrest in the important oil exporter Libya disrupted its oil output, although the International Energy Agency (IEA) and Saudi Arabia said they would be ready to act if there were any supply shortage.
Libyan leader Muammar Gaddafi refused to step down in a speech on Tuesday and threatened tougher action against ongoing protests, as rebel troops said the country's eastern regions, including major oilfields, had broken free from his rule.
Two major oil companies, Italian ENI and Spain's Repsol, shut down production because of the political violence, cutting about 10 percent of Libya's 1.6 million barrels per day (bpd) oil output.
ENI, the largest producer of oil and gas in Libya which produces about one-third of Libya's crude oil, said that some of its oil and gas production activities had been temporarily suspended, but added that none of its facilities has been damaged.
Trade sources said the third-largest oil producer in Africa also declared force majeure on all oil product exports.
Libya exports some 1.2 million bpd of crude oil, ranking about 17th among world oil producers.
Light, sweet crude for March delivery surged 7.37 dollars, or 8. 55 percent, to 93.57 dollars a barrel on the New York Mercantile Exchange, the highest level since October 2008. The benchmark for April delivery soared 5.71 dollars, or 6.36 percent, to settle at 95.42 dollars a barrel.
The Saudi oil minister, Ali al-Naimi, tried to calm down the panic market on Tuesday by saying that there was no supply shortage, and that if there were any, the Organization of the Petroleum Exporting Countries was ready to act.
The IEA also said that it stood ready, as always, to make oil available to the market in the event of a major supply disruption if alternative supplies cannot readily be made available via normal market mechanisms.
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