Brent crude rises $1/bbl as Libya unrest stokes supply fears

23 February 2011 10:42  [Source: ICIS news]

SINGAPORE (ICIS)--Brent crude prices rose by more than $1/bbl (€0.73/bbl) on Wednesday on heightened concerns that Libya’s political unrest will disrupt global oil supply amid news of production cuts from the OPEC-member country.

At 09:20 GMT, April Brent on London’s ICE futures was trading at $107.09/bbl, up $1.31/bbl from the previous close, after earlier hitting a session high of $107.50/bbl.

April NYMEX light-sweet crude futures were trading at $96.06/bbl up 64 cents/bbl from the previous close. Earlier, the contract hit $96.25/bbl - the highest level since early October 2008.

On Monday, the political turmoil in Libya pushed April ICE Brent to $108.70/bbl during intra-day trading. It was the highest level hit since September 2008.

The ongoing violence in Libya has also raised concerns over the security of oil exports from other producers in the Middle East and North Africa amid widespread political unrest in these regions.

On Tuesday, European oil companies ENI and Repsol halted oil production in Libya.  Repsol said it had shut the El Sharara oilfield, which produces around 200,000 bbl/day and accounts for around 13% of daily Libyan output.

ENI has temporarily stopped some oil and gas operations, including flows of gas through the Greenstream gas pipeline from Libya to Italy.

Earlier this week, Wintershall, the oil and gas exploration subsidiary of BASF, announced that it would halt its oil production in Libya that totals around 100,000 bbl/day.

Libya produces around 1.58m bbl/day of crude according to data from the International Energy Agency (IEA).

In a statement on its website, the IEA said it “…stands ready, as always, to make oil available to the market in the event of a major supply disruption if alternative supplies cannot readily be made available via normal market mechanisms”.

“At present, we are not in a situation where that is necessary. However, we are monitoring the situation closely and on an ongoing basis,” the organisation added.

Saudi Arabia sought to calm oil markets on Tuesday, with the country’s oil minister Ali al-Naimi saying that OPEC would be ready to export more oil if needed, but added that at present, there was no shortage.

According to IEA data, Europe receives over 85% of Libya’s crude exports, while about 13% heads East of Suez. In 2010, Libya exported 1.2m bbl/day of crude oil to IEA countries.

An additional 150,000 bbl/day of crude oil from Libya went to China in 2010, accounting for some 3% of the total Chinese crude imports, IEA data showed.

($1 = €0.73)

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By: James Dennis
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