Oil climbed to the highest in almost 30 months in London as Libya's violent uprising reduces supplies from Africa's third-biggest producer.
Brent rose above $114 a barrel on estimates the revolt caused Libya to lose as much as two-thirds of its oil output. Futures for April delivery in New York gained for a sixth day, after climbing to $100 a barrel yesterday.
The cuts create "significant upside risk" to prices by reducing Opec's ability to absorb any escalation of supply disruptions in the Middle East, Goldman Sachs Group said.
"The events in Libya and North Africa have brought geopolitical risk back onto the radar," Soozhana Choi, head of Asian commodities research at Deutsche Bank AG in Singapore, said. "How much higher prices can go really depends on the spread of protests in the region."
Brent oil for April settlement rose as much as $2.96, or 2.7 per cent, to $114.21 a barrel on the London-based ICE Futures Europe exchange, the highest since September 1st, 2008. The contract traded at $113.89 at 3pm Singapore time. It has rallied 11 per cent this week.
Crude for April delivery on the New York Mercantile Exchange gained as much as $1.39, or 1.4 per cent, to $99.49 a barrel in electronic trading. Yesterday, it added $2.68 at $98.10, the highest settlement since October 1st, 2008. Futures are up 24 per cent in the past year.
Libya, which pumps 1.6 million barrels a day of oil, is the ninth-largest producer among the 12 members of the Organisation of Petroleum Exporting Countries, shipping most of its crude and fuels across the Mediterranean to Europe. The country has the largest reserves in Africa.
As much as 1 million barrels of Libya's daily oil production may have been shut, Barclays Capital said in a report yesterday. Goldman Sachs estimated disruptions at 500,000 barrels a day.
Total SA and OMV AG became the latest energy producers to scale back Libyan operations, following Eni SpA, RWE AG and BASF SE's Wintershall unit. China National Petroleum Corp said it relocated 47 of its Libyan-based workforce.
New York futures retreated from an intraday high of $100 a barrel yesterday after Saudi Arabia and other countries said they might not wait for an emergency meeting of Opec to increase output, according to a source with knowledge of producer-nation policy. Any extra supply would be conditional on requests for more crude, they said.
Crude stockpiles in the US, the world's largest oil user, climbed 163,000 barrels last week, according to the industry-funded American Petroleum Institute. A new report from the Energy Department could show supplies increased 1.1 million barrels in the seven days ended February 18th from 345.9 million, according to the median estimate of 15 analysts surveyed by Bloomberg News.
Libya is the latest nation to be rocked by protests ignited by the ouster of Tunisia's president last month and fanned by the February 11th fall of Egyptian president Hosni Mubarak. Disturbances have spread to Iran, Bahrain, Yemen and Algeria.
Bloomberg
