Crude up $1/bbl on Libya, Middle East supply concerns

18 March 2011 07:24  [Source: ICIS news]

SINGAPORE (ICIS)--Crude futures rose more than $1/bbl (€0.71/bbl) on Friday, buoyed by supply concerns amid heightened tensions in the Middle East and North Africa.

At 06:00 hours GMT, May Brent on London’s ICE futures was trading at $116.40/bbl, up $1.50/bbl on the previous close, after rising to an earlier session high of $116.50/bbl.

April NYMEX light-sweet crude futures were trading at $103.26/bbl, up by $1.84/bbl from the previous close, after previously climbing to an intra-day high of $103.66/bbl.

Crude prices have risen to their highest level since the devastating earthquake and tsunami stuck northeast Japan on 11 March, triggering worries over demand from the world’s third largest oil consumer.

Asian equity markets rebounded on Friday, with the Nikkei 225 Index in Japan up by 2.24% after the Group of Seven (G7) finance ministers agreed on measures to prevent a surge in Yen values following the recent earthquake and ongoing nuclear crisis in the world’s third largest economy.

In North Africa and the Middle East, developing unrest continued to escalate supply concerns.

The UN Security Council agreed to the implementation of a no-fly zone in Libya and the use of “all necessary measures” in order “to protect civilians and civilian areas”. The move comes as forces loyal to Libyan leader Muammar Gaddafi advance on the rebel stronghold of Benghazi.

Production from Libya, which is the world’s 12th largest oil exporter, has been reduced by at least 1m bbl/day since late February from its usual level at around 1.6m bbl/day as a result of the armed conflict.

In Saudi Arabia, Shiites held more protests in support of opposition groups in Bahrain and called for the withdrawal of Saudi troops, which had been sent to the neighbouring Gulf state to help quell unrest.

Saudi Arabia’s King Abdullah is set to address the nation on Friday and appears likely to introduce measures to ease tensions in the world’s leading oil exporter and OPEC heavyweight.

Saudi Arabia produces around 8.62m bbl/day and accounts for some 9.7% of global supplies, according to the latest data from the International Energy Agency (IEA).

The protests in Saudi Arabia follow the arrest of opposition leaders in Bahrain on Wednesday, a day after a crackdown by security forces on protesters in Bahrain’s capital of Manama left five dead and injured more than 200 people. Bahrain, a predominately Shiite state ruled by a Sunni-led government and monarchy, is a close ally of Saudi Arabia.

Iran has also protested to the UN over the crackdown in Bahrain. However, there are suspicions in Bahrain that Iran has encouraged protesters in Bahrain.
Elsewhere in the region, government forces in Yemen also attacked protesters, wounding at least 84 people, media reports said.

Meanwhile, concerns over the impact of the recent devastating earthquake on Japan’s refining capacity and oil demand were eased slightly by the restart of TonenGeneral Sekiyu’s 335,000 bbl/day refinery in Kawasaki.

Another Japanese refiner, Kyokuto Petroleum Industries (KPI), restarted its 175,000 bbl/day refinery at Chiba on Wednesday and expects to reach full production in the next few days.

JX Nippon Oil and Energy and Cosmo Oil also announced on Friday that they would raise production at their refineries in western Japan in order to alleviate supply shortages in the country.

($1 = €0.71)

Click here for the latest news on the Japan disaster

By: James Dennis
+65 6780 4359

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