Oil prices climb as traders eye Libya crisis

23rd August 2011, Comments 0 comments

Crude prices rose on Tuesday as traders monitored the crisis in oil-rich Libya, with rebels claiming victory but one of Moamer Kadhafi's sons insisting his father was still in control, analysts said.

Also supporting prices was expectations that it could take years before the North African country's oil output was back to pre-revolution levels.

Brent North Sea crude for October delivery rose 48 cents to $108.84 a barrel in London deals.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for October delivery gained $1.29 to $85.71.

Brent oil sank Monday on the prospects of a recovery in Libyan crude output as a rebel advance deep into Tripoli left leader Kadhafi facing the end-game after six months of violent unrest.

Brent is more affected than WTI by the situation in Libya since oil from the North Sea as well as from Libya serve the European markets.

Around 85 percent of Libyan oil output was exported to Europe until the revolt disrupted the country's production six months ago.

Libya's rebels declared the "Kadhafi era" over after taking charge of most of Tripoli, but his son Seif al-Islam claimed Tuesday his father was still in control of the capital.

Meanwhile, analysts cautioned it could take Libya two years to restore oil production to pre-revolt levels and that disputes over who would hold power in any post-Kadhafi regime could also delay rebuilding the economy.

The lack of any strong institutions was another factor that could impede the country's road back to resuming full-scale crude production, they said.

"I don't think they can resume production immediately. It might take place in three or four months but to go back to the level they used to produce, it may take two years," Shukri Ghanem, the exiled former Libyan oil minister, told energy news specialist Platts on Monday.

Before the uprising began in February, Libya produced about 1.6 million barrels per day and exported 1.3 million, much of it light crude highly valued by Europe's refiners, which have struggled to replace it.


© 2011 AFP

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