Oil prices jump as West launches air strikes in Libya

21st March 2011, Comments 0 comments

World oil prices rallied on Monday after Western air strikes were launched on key crude exporter Libya over the weekend.

New York's main contract, light sweet crude for delivery in April, added $1.75 to $102.82 a barrel.

In London morning trade, Brent North Sea crude for May won $1.43 to $115.36 per barrel.

"Brent oil prices rose ... following military intervention in Libya over the weekend," said analyst Conall Mac Coille at Davy stockbrokers in Dublin.

"The increase in oil prices has fed through to other commodities, particularly metals."

In the West's biggest intervention in the Arab world since the 2003 US-led invasion of Iraq, US warships and a British submarine fired more than 120 Tomahawk cruise missiles into Libya late Saturday, US military officials said.

The joint action by the United States, Britain and France came after the UN Security Council authorised the use of "all necessary means" to protect civilians and enforce a ceasefire and no-fly zone against Libyan leader Moamer Kadhafi's forces.

"Oil prices have gone up due to military attacks in Libya from UN forces," said Victor Shum, senior principal for Purvin and Gertz international energy consultants in Singapore."

"More oil installations could be damaged due to collateral damage and internal sabotage," Shum told AFP.

"The unrest in the Middle East and North African region may spread to other (parts of the) region, and hence the contagion effect on oil prices remain. Oil supply disruption is going to support prices in its triple digits."

Kadhafi has continued attacking rebels after an uprising against his four-decade-old regime following similar movements in Egypt and Tunisia that rocked the region and sent oil prices soaring.

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


© 2011 AFP

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