Oil prices advance on Middle East turmoil

17th March 2011, Comments 0 comments

World oil prices rose Thursday on the back of unrest in the crude-rich Middle East and North Africa, while traders kept an eye on the fast-moving Japanese nuclear crisis, analysts said.

New York's main contract, light sweet crude for delivery in April, known as West Texas Intermediate (WTI), rose $1.53 to $99.51 per barrel.

In London midday trade, Brent North Sea crude for April gained $1.85 to $112.45.

The market reversed earlier losses as Middle Eastern tensions came to the fore, said Victor Shum, senior principal for Purvin and Gertz energy consultants in Singapore.

"It is the volatility ... as the markets weigh the importance of the nuclear crisis in Japan and unrest in the Middle East," he told AFP.

"Concerns of unrest in the Middle East outweigh concerns of the nuclear crisis in Japan."

Fresh violence roiled the region on Thursday, with five people killed when Bahraini police crushed a pro-democracy protest in Pearl Square in the capital Manama while six opposition activists were arrested.

The United Nations warned of "shocking and illegal" abuses in Bahrain after a bloody crackdown on Shiite-led protesters which has alarmed the United States and infuriated the Shiite world.

Political dissidents were rounded up at gunpoint in midnight raids and police armed with shot-guns stood outside Manama's main hospital, amid reports the authorities were beating doctors and denying treatment to the wounded.

In oil exporter Libya, meanwhile, national television said that forces loyal to leader Moamer Kadhafi had wrested control of Misrata, one of the last rebel-held bastions, and were "purging" it of insurgents.

Misrata came under rebel control some 10 days after the uprising against Kadhafi's regime began on February 15 and has been the scene of sporadic clashes between the two sides ever since.

Libya was producing 1.69 million barrels per day before the unrest, according to the International Energy Agency. Of this 1.2 million were exported, mostly to Europe. Other major customers are China and the United States.

In early Asian trade on Thursday, oil prices had fallen as investors fretted over Japan's worsening nuclear crisis with the Fukushima power plant hit by four blasts since Friday's devastating earthquake and tsunami.

However, Tokyo Nikkei stock index ended Thursday down 1.44 percent, paring earlier heavy losses, as television images showed Japanese military helicopters dumping water on the plant in a bid to douse radioactive fuel rods.

Traders fear the disaster could affect crude consumption in Japan, which is the world's third largest economy and the third largest oil-consumer.

"The extraordinary series of events in Japan and North Africa/the Middle East continued to dominate the market," said Westhouse Securities analyst David Hart.

"While the unfolding disaster in Japan worsens by the day, escalating violence in Libya, where the Kadhafi regime has gained the upper hand, and the use of troops from Gulf Cooperation Council member countries (in Bahrain), appear to have had greater impact moving crude prices higher."

Bahrain's King Hamad declared a three-month state of emergency on Tuesday, while Iran has condemned an intervention by Saudi-led Gulf troops to help put down Shiite-led protests.


© 2011 AFP

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