Oil price slips on OPEC talks, reports of Kadhafi exit plans

8th March 2011, Comments 0 comments

World oil prices fell slightly Tuesday as OPEC members held discussions over the Libya crisis amid unconfirmed reports that leader Moamer Kadhafi was seeking a safe exit, traders said.

New York's main contract, light sweet crude for delivery in April, dipped 20 cents to $105.44 a barrel, one day after soaring to $106.95 -- the highest level for 2.5 years.

In London, Brent North Sea crude for April dropped 14 cents to $114.90.

Analysts said the dip would likely be short-lived as cyber-activists in OPEC kingpin Saudi Arabia have called for protests Friday demanding change in the kingdom -- stoking concerns Riyadh faces a political test too.

"My only concern is that tensions are still there for other Middle East countries and any further uprisings could see oil spike further," ETX Capital trader Manoj Ladwa told AFP.

Members of the Organization of Petroleum Exporting Countries (OPEC) are holding consultations over the oil market in light of the Libyan turmoil, the Kuwaiti oil minister said on Tuesday.

"We are in consultation but have not yet decided which direction" we are heading, Sheikh Ahmad Abdullah al-Sabah told reporters when asked if OPEC was discussing whether to raise crude production.

He also denied that Kuwait, OPEC's fifth largest producer, had increased output. The cartel pumps about 40 percent of the world's oil.

Crude oil prices jumped on Monday as traders fretted about escalating clashes in Libya between forces loyal to Kadhafi and rebels seeking to end his four-decade rule.

Rebels on Tuesday said they rejected a mediator's offer of talks with Kadhafi and demanded that he leave the country. Tripoli meanwhile dismissed as "rubbish" any suggestion of an approach from the Libyan leader.

"Along with talk of ... Kadhafi looking for a safe exit, crude oil has retraced some of its recent gains," trader Ladwa said.

Oil prices also weakened on Tuesday as the United States refused to rule out tapping its oil reserves to tackle high oil prices.

White House chief of staff William Daley said Sunday that the US had not ruled out tapping its strategic oil reserves to help dampen the higher cost of oil.


© 2011 AFP

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