Fears of a supply disruption arising from continued unrest in Libya have pushed up oil prices, but a leading Libyan oil official warns they could spike even higher if there is no immediate resolution to the ongoing violence.
Shokri Ghanem, chairman of Libya's National Oil Corp., told Reuters that supply reductions to world markets drive the price of oil to more than $130 a barrel by next month if troubles persist.
In the Reuters interview, Ghanem said oil output had fallen to 700,000-750,000 barrels per day (bpd) -- from 1.6 million bpd before the crisis erupted -- following the departure of thousands of foreigners who work for Libya’s energy industry.
Harry Tchilinguirian, head of commodity market strategy at BNP Paribas, told Reuters: The question is what will be the outcome over the next few days -- will there be a full stoppage as the evacuation of personnel from Libya continues? What's at stake is the number of barrels in the Middle East.
Last week, Brent crude oil prices jumped to more than $118 per barrel -- a two-and-a-half-year high – but then eased when Saudi Arabia assured it could compensate for any drop in output due to the Libyan crisis.
Given the geopolitical tensions we are seeing in the Middle East, conventional bets on supply and demand... are off. The market's focus is on the bigger picture, added Tchilinguirian.
Meanwhile, supporters of Moammar Gaddafi are reportedly moving into the eastern part of the country which is largely in the hands of the opposition and have captured an oil installation in the city of Brega.
It's not an attack,” Ahmed Jerksi, the manager of the oil installation in Brega, told the Associated Press.“We are OK. The government troops came in to secure the whole area. Our concern is to maintain the facility,
However, conflicting reports stated that rebels had retaken the town.
They [government forces] tried to take Brega this morning, but they failed, spokesman Mustafa Gheriani told Reuters. “It is back in the hands of the revolutionaries. [Gaddafi] is trying to create all kinds of psychological warfare to keep these cities on edge.
In addition, jets loyal to Gaddafi have reportedly bombed an arms dump in the city of Ajdabiya, also in Libya’s east.
Gaddafi has responded to threats of sanctions by the United Nations and other western bodies by claiming that their condemnation was based on false reports.
He challenged the UN to investigate his actions and vowed that he and his forces would fight to the last man and the last woman. In addition, he again attributed the opposition against him in Libya to shady members of al-Qaeda which he claims had formed dormant cells in several towns.