COMMODITIES:OIL PRICES jumped to a two-year high above $105 a barrel yesterday as the protests that has swept across the Middle East hits Libya, for the first time affecting a significant producer of crude.
Traders said the growing unrest in Libya was more significant to the oil market than earlier protests in Tunisia and Egypt.
Libya is a medium-sized member of Opec, the oil producers’ cartel, producing 1.6 million barrels a day out of a global total of 88.5 million barrels a day, according to data from the International Energy Agency.
It is an important exporter of crude oil to Europe, supplying just over 1 million barrels a day to the continent, with Italy, France and Germany the top importers.
Crude oil futures rallied sharply after a weekend of protests and violence across the country, which culminated in a speech by Seif al-Islam Gadafy, the son of leader Muammer Gadafy, in which he warned that a civil war could result in Libya’s oil being “burned by thugs, criminals, gangs and tribes”.
European Brent oil futures rose 2.5 per cent to a peak of $105.08 a barrel – the highest since September 2008.
West Texas Intermediate, the US benchmark, was 3.6 per cent higher at $89.33.
Precious metals also benefited from the uncertainty in the Middle East.
Gold touched $1,400 an ounce for the first time since early January, up 1.2 per cent on the day, while silver hit a fresh 30-year high of $33.50.
The immediate effect of the unrest on Libya’s oil production was unclear.
The market was buoyed by an unconfirmed report from Al-Jazeera, the Arab news channel, that a strike had stopped production at the Nafoora oilfield in the country’s Sirte basin.
European majors such as BP, Royal Dutch Shell and Statoil said they had halted some exploration operations in the country and evacuated staff.
Vitol, the world’s largest oil trader, said trading volumes rose 25 per cent last year compared with 2009, helping it to deliver a “solid performance”.
The privately-held company does not disclose profitability but said in a statement yesterday that revenues rose to $195 billion, up more than one-third from $143 billion in the previous year. – (Copyright The Financial Times Limited 2011)
