Oil Soars over 8 percent on Libya's Supply Disruption

February 22, 2011

2011-02-23 05:29:07 Xinhua Web Editor: Zhangxu

U.S. crude oil price soared over 8 percent on Tuesday as unrest in the important

oil exporter Libya disrupted its oil output, although the International Energy

Agency (IEA) and Saudi Arabia said they would be ready to act if there were any

supply shortage.

Libyan leader Muammar Gaddafi refused to step down in a speech on Tuesday and

threatened tougher action against ongoing protests, as rebel troops said the

country's eastern regions, including major oilfields, had broken free from his

rule.

Two major oil companies, Italian ENI and Spain's Repsol, shut down production

because of the political violence, cutting about 10 percent of Libya's 1.6

million barrels per day (bpd) oil output.

ENI, the largest producer of oil and gas in Libya which produces about one-third

of Libya's crude oil, said that some of its oil and gas production activities

had been temporarily suspended, but added that none of its facilities has been

damaged.

Trade sources said the third-largest oil producer in Africa also declared force

majeure on all oil product exports.

Libya exports some 1.2 million bpd of crude oil, ranking about 17th among world

oil producers.

Light, sweet crude for March delivery surged 7.37 dollars, or 8. 55 percent, to

93.57 dollars a barrel on the New York Mercantile Exchange, the highest level

since October 2008. The benchmark for April delivery soared 5.71 dollars, or

6.36 percent, to settle at 95.42 dollars a barrel.

The Saudi oil minister, Ali al-Naimi, tried to calm down the panic market on

Tuesday by saying that there was no supply shortage, and that if there were any,

the Organization of the Petroleum Exporting Countries was ready to act.

The IEA also said that it stood 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.

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