Oil near $100 as Libya's oil industry in chaos
Monday, February 28, 2011; 12:19 AM
SINGAPORE -- Oil prices jumped to near $100 a barrel Monday in Asia as Libya's violent power struggle continued to disrupt crude output in the OPEC nation. Violent protests in Oman also raised fears political upheaval could impact other crude exporters.
Benchmark crude for April delivery was up $1.76 at $99.64 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 60 cents to settle at $97.88 on Friday.
In London, Brent crude for April delivery was up $2.20 to $114.34 a barrel on the ICE Futures exchange.
As fighting between supporters and opponents of Libyan leader Moammar Gadhafi continued over the weekend, foreign oil companies scrambled to evacuate staff. The chaos in Libya's oil industry has cut production by at least 750,000 barrels daily, down from its normal capacity of 1.6 million barrels, the International Energy Agency reported late Friday.
Investors are worried that anti-government protests that have convulsed societies across North Africa and the Middle East this year could spread to other oil-rich countries.
On Sunday, riot police in Oman battled pro-democracy demonstrators, killing at least one person. In Saudi Arabia, the world's biggest oil exporter, more than 100 leading Saudi academics and activists have joined calls for King Abdullah to enact sweeping reforms, including relinquishing many powers under a constitutional monarchy.
Traders are also beginning to calculate how much rising fuel costs will undermine consumer spending and global economic growth.
"Investors are now worrying that rising oil prices are less a symptom of macro strength and more a threat to growth," Morgan Stanley said in a report. "It seems that (a Brent average of $115 this year) would be a material headwind for growth."
In Asia, higher crude prices are putting more pressure on central banks to raise interest rates to choke off quickening inflation, moves that could also undermine economic growth.
"The ongoing oil shock adds a new layer of risk to region's landing," Citigroup said in a report. "If the pace of recent increase is sustained, the risk to a rougher landing in Asia grows."
In other Nymex trading in March contracts, heating oil rose 3.9 cents to $2.97 a gallon and gasoline gained 2.6 cents to $2.76 a gallon. Natural gas futures were down 1.5 cents at $3.86 per 1,000 cubic feet.