New York oil price hits new peak on Libya unrest

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New York oil briefly surged past $104 on Friday to strike the highest level for two and a half years, as traders reacted to worsening violence in Libya.

New York's light sweet crude for April delivery surged as high as $104.09 per barrel -- which was last seen on September 29, 2008. It later stood at $103.45, up $1.54 from Thursday's closing level.

Brent North Sea crude for April rallied as high as $116.30 before pulling back to $115.77, up 98 cents.

"Crude oil prices held strongly above $100 per barrel as ongoing political unrest in Libya continues to dominate the markets," Sucden analyst Myrto Sokou said.

However, Brent prices remain off the highs near $120 that were hit last week as violence flared in Libya, where opponents of leader Moamer Kadhafi have taken control of swathes of the east of the country.

The Middle East and North Africa (MENA) region has been rocked by unrest since an uprising in Tunisia in January brought down the government there and led to similar protests in Egypt which ousted president Hosni Mubarak.

"The real fear has all the time been for a wider spread of the uprising across the MENA region with disruptions in oil production happening not just in Libya," SEB commodities analyst Bjarne Schieldrop said.

"There is currently little news with respect to any further uprising in Saudi Arabia, Iran, Oman (and) Algeria. This is definitely calming the market at the moment."

He added: "There is little reason to believe that the problems are over in Libya -- or that Libya will be the last of the MENA countries to experience these kinds of troubles.

"Developments have taken place at high speed and high intensity across the MENA region so far and further developments are likely to take place sooner rather than later. We thus think that the oil price has further to go on the upside before this is over."

Oil had fallen slightly on Thursday as investors digested Venezuela's proposal for an international peacekeeping mission to avert civil war in Libya.

But prices resumed their upward path on the back of doubts about Venezuela's proposal to mediate in the crisis, analysts said.

The head of Libya's National Oil Corporation, Shukri Ghanem, told AFP Thursday that oil production had "been halved," mainly due to the departure of foreign workers who feared for their safety.

Ghanem, who is also de facto oil minister, declined to provide current production figures but stressed that "none of the oil installations were damaged."

"We continue to produce and export" oil, he said.

Libya produces around 1.6 million barrels a day, some 85 percent of which normally goes to Europe, according to the International Energy Agency.


© 2011 AFP

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