Turmoil sends oil surging to highest since 2008
Published 02/03/2011 | 05:00
Oil surged to the highest level since September 2008 as Middle East turmoil threatened to spread from Libya to top OPEC producers Saudi Arabia and Iran.
Crude jumped 2.7pc as Libyan rebels braced for renewed clashes with forces loyal to leader Muammar Gaddafi. Saudi Arabia's benchmark stock index plunged the most since November 2008 on concern regional unrest would extend to the kingdom, and Iranian protesters clashed with security forces in Tehran, Al Arabiya television reported.
"All over the region, things are keeping the market very nervous," said Phil Flynn, vice president of research at PFGBest in Chicago. "Right now in this Middle East situation there's no real end in sight."
Oil for April delivery rose $2.66 to $99.63 a barrel on the New York Mercantile Exchange, the highest settlement since September 30, 2008. Prices jumped 5.2pc in February and have risen 27pc in the past year.
Brent crude for April settlement climbed $3.66, or 3.3pc, to $115.46 a barrel on the London-based ICE Futures Europe exchange at 2.30pm in New York.
Fighting in Libya caused its output to drop to an eight-month low last month.
Contracts tied to the cost of shipping Saudi Arabian oil jumped 12pc on speculation that tanker voyages will lengthen as the country compensates for reduced supplies from Libya, according to broker ACM-GFI in London.
Political turmoil has spread to Saudi Arabia's neighbours, with protests erupting in Oman and Bahrain, and websites have called for a nationwide Saudi "Day of Rage" on March 11 and 20, Human Rights Watch said yesterday.
The group called for the immediate release of dissident Shi'ite cleric Tawfiq al-Amir, who called for a constitutional monarchy and equal rights for the Shi'ite minority.
The kingdom's Tadawul All Share Index slumped 6.8pc yesterday. The measure has lost a fifth since reaching its 2010 high, the common definition of a bear market.
"With the potential for negative developments in so many countries, we're starting to see the risk premium return for crude," said Matt Smith, a commodities analyst for Summit Energy in Louisville, Kentucky. (Bloomberg)