Oil prices rise on fears of Libya unrest; clashes reported in Tripoli
Friday, February 25, 2011; 12:16 PM
Oil prices rose as violence in Libya shook global financial markets. As Steven Mufson reported:
Crude oil prices in New York broke through the $100-a-barrel threshold Thursday as violence in Libya continued to shake world financial markets and threatened to sidetrack the U.S. economic recovery.
After touching $103.41 a barrel, crude oil for April delivery ended up down slightly for the day, at $97.28 on the New York Mercantile Exchange. In Europe, the price of Brent grade crude oil, another important benchmark, hit $119 a barrel before dropping back to $114.
But the triple-digit petroleum price weighed heavily on stock markets for much of the day and heightened fears that high fuel costs could be a drain on consumers. Thursday's closing price was still about 50 percent higher than the price nine months ago and the higest level since September 2008.
Prices dropped Friday after speculation that Saudi Arabia would increase its production. As AP explained:
Stocks recovered their poise Friday following the previous day's sharp drop in oil prices on speculation that Saudi Arabia would be willing to make up for any shortfall in crude production from Libya.
The catalyst to Thursday's decline in oil prices was the expectation that Saudi Arabia, the world's biggest crude exporter, could pump more oil out to make up for lost supplies from Libya, which is effectively split into two after a popular uprising.
In normal circumstances, Libya produces about 1.6 million barrels of crude per day, but its output has been heavily impacted by the violence that has caused nearly 300 deaths, according to a partial count by Human Rights Watch.
Violence in Libya has escalated as reports of clashes came out of Tripoli, as Leila Fadel , Liz Sly and Howard Schneider reported:
Gunfire erupted in at least three parts of Libya's capital Friday, as opponents of Moammar Gaddafi tried to revive their protests against his regime in spite of a massive security clampdown.
Five people were killed when security forces opened fire on anti-government demonstrators in the western neighborhood of Janzour, Reuters reported. Hours earlier, Libyan state television announced that the government would distribute $400 to each family and raise salaries for state employees as much as 150 percent - an apparently unsuccessful bid to head off the demonstrations.
The gunshots, shortly after prayers finished, were reported by multiple residents of the embattled capital. An unidentified man interviewed over the telephone by CNN said he was among 400 to 500 protesters who took the streets after leaving the mosque, only to be confronted by men in civilian clothes toting machine guns.
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