Oil prices rise with international tensions
Wednesday, March 16, 2011; 3:22 PM
NEW YORK -- Oil prices rose Wednesday as traders tried to gauge the impact that numerous international crises will have on world energy demand.
Benchmark crude for April delivery gained 80 cents to settle at $97.98 per barrel on the New York Mercantile Exchange. Oil rose as high as $99.60 earlier in the session. In London, Brent crude rose $2.10 to settle at $110.62 per barrel on the ICE Futures exchange.
A series of global events has rattled markets in the past several weeks, with Wednesday's focus shifting between Japan's crisis and rising tensions in Bahrain.
Analysts say oil prices will continue to have wild swings as perceptions shift about demand in the global economy. The price of benchmark crude has fallen after topping $105 a barrel earlier this month.
"There's just so much uncertainty," PFGBest analyst Phil Flynn said. "Everyone's trading emotionally."
Analyst Jim Ritterbusch said the global situation, particularly in the Middle East and North Africa, overshadowed disappointing U.S. economic news that new home construction fell to the second-lowest level on record in February and wholesale prices rose last month.
"There are just so many geopolitical and economic and political crosscurrents that the market shifts each day in an attempt to discount things," he said.
Here are some of the issues moving energy prices this week:
-In Bahrain, soldiers and riot police clashed with protesters demanding political reforms. Bahrain doesn't produce much oil but it is adjacent to Saudi Arabia, the world's biggest producer of oil. More than 1,000 Saudi-led troops entered Bahrain Monday to support the monarchy.
If the uprising grows, analysts fear it could spill across the border into Saudi Arabia and pose a threat to oil production there. So far protests have been minimal in Saudi Arabia. Experts also worry that another OPEC heavyweight, Iran, may be swept by uprisings. Saudi Arabia produces about 8.4 million barrels of oil per day, more than any country in the world. Iran produces 4.3 million barrels per day. Bahrain also is strategically important to the U.S. as home to the Navy's 5th Fleet.
"The Bahrain/Saudi situation is a powder keg," analyst and trader Stephen Schork said.
-In Libya, Moammar Gadhafi continued to pound rebel strongholds as the country's oil exports ground to a halt. Before the uprising, Libya produced about 1.6 million barrels per day, or nearly 2 percent of world demand. Saudi Arabia and other OPEC countries have increased production and say they can make up for the Libyan crude, most of which went to Europe.