UpdateUS crude soars $7.18/bbl on Libya unrest

22 February 2011 00:18  [Source: ICIS news]

(adds recent crude prices)

HOUSTON (ICIS)--US crude soared $7.18/bbl on Monday as unrest continued in Libya.

As of 17:39 hours Houston time (23:39 GMT), West Texas Intermediate (WTI) was trading at $93.38, up from $86.20.

A softer US dollar and short covering ahead of the expiry of the March NYMEX WTI contract on 22 February added further upward pressure to prices. The US market was closed on Monday for the President’s Day holiday, although electronic oil trading continues.

April Brent on London’s ICE futures exchange was trading at $108.00/bbl, up $5.48/bbl from the previous close.

A strike has halted output from Libya’s Nafoora oilfield, according to media reports. Nafoora, which has an estimated production of around 100,000 bbl/day, is operated by Arabian Gulf Oil Co (AGOCO), a subsidiary of the state-owned National Oil Corp (NOC).

UK-based energy firm BP has also announced that it has suspended preparations for an oil and gas exploration-drilling programme in western Libya.

BP does not presently produce hydrocarbons from Libya, which is a member of OPEC.

“Libya...is in the headlines now. Even if it is not a major oil producer, it is [an OPEC] member nonetheless,” said Victor Shum, a Singapore-based analyst with Purvin & Gertz.

Oil revenues accounted for more than 95% of Libya’s export earnings, according to the Energy Information Administration (EIA).

The vast majority of Libya’s crude exports go to Europe, where the country has extensive interests in the trading, refining and retailing of petroleum products, according to the EIA.

China and other countries also purchase oil from Libya. 

At the height of the political upheaval in Egypt, Brent crude crossed the $100/bbl mark on concerns that operations at the Suez Canal, an important shipping channel for crude supplies, would be disrupted.

Oil supply concerns grew stronger after protests erupted in other parts of the Middle East and north Africa following the ouster of Egyptian President Hosni Mubarak, who ruled the country for 30 years.

“As long as these protests continue in the oil-producing countries in the Middle East as well as Africa, we can see geopolitical risk premiums return to oil futures,” said Purvin & Gertz's Shum.

WTI crude prices were expected to average “at the mid-$90s/bbl” in 2011, he added.

(Additional reporting by Nurluqman Suratman and James Dennis)

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By: Al Greenwood
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