The spectre of full civil war in oil-rich Libya and reports of the creation of an Islamic emirate in country's "Barqa" region has moved the Mid-East crisis into a more dangerous phase, setting off an explosive rise in US crude prices.
"This is potentially worse for oil than the Iran crisis in 1979," said Paul Horsnell, head of oil research at Barclays Capital. "That was a revolution in one country, here there are so many countries at once. The world has only 4.5m barrels-per-day (bpd) of spare capacity, which is not comfortable."US oil contracts jumped $6 a barrel on Monday to over $95, chasing Brent crude, which traded as high as $108, as the global oil system is drawn into the vortex. While Egypt is a minor oil player, Libya's Sirte Basin holds Africa's largest reserves and supplies 1.4m bpd in exports, mostly to Italy, Germany and Spain.
BP, Statoil, Total and ENI have begun evacuating families and non-essential staff from Libya. BP chief Bob Dudley told Sky News that the company has only limited exploration in Libya but "remains committed to doing business" there.
Germans oil explorer Wintershall said it was winding down its Libyan operations, but Italy's ENI has most to lose from its pipeline to Libya. ENI's stock tumbled 5pc in Milan, leading a 3.6pc fall in the MIB index.
Global oil inventories are higher than before the 2008 price spike, and OPEC can raise output if needed. It has refused to act so far despite pleas from the International Energy Agency (IEA) that the supply picture is already "alarming".
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2 comments:
Isn't it amazing that the first drop of oil of today's market hasn't been paid for, been pumped, shipped, refined or delivered to our neighborhood.....yet the pump prices surged today in Salisbury to an average 0f $3.13 9/10 per gallon.
I guess the economy is certainly surging forward for the oil companies, the shore's distributors and retailers.
Let us all remember the local stores who have gouged us again. There will come a time when the middle class rebounds and we will treat the them accordingly.
FOR THE PEOPLE,
Our household is fought back by purchasing a Toyota Prius. We just filled the tank for the second time and we made a trip to Annapolis and back. At 60 MPG it has made a HUGE difference at the pump and in our wallets. In fact, I'm actually thinking of buying another one.
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