Oil jumps as clashes in Libya intensify

By @ibtimes on

U.S. crude prices jumped to their highest since September 2008 on Friday and Brent rose above $116 a barrel as Libyan security forces cracked down on protesters in Tripoli and clashed with rebels near the major oil terminal of Ras Lanuf.

The market was watching out for extended disruptions, weighing the threat that Libya's key oil sector could become a target in the revolt, as well as the possibility that the unrest could spread and impact supplies from other big producers in the region, such as OPEC's leading oil producer Saudi Arabia.

U.S. crude futures for April delivery rose $1.57 cents to $103.48 a barrel at 11:17 a.m. EST, after hitting $104.09, the highest since front-month crude hit $106.91 on September 29, 2008, eclipsing $103.41 reached on February 24.

Brent crude futures for April delivery were up $1.14 to $115.93 a barrel, having earlier reached $116.30.

Brent's premium to its U.S. counterpart was just above $12 a barrel, down about 57 cents from the previous session and well below last week's record $16.91.

Brent's price rise has been stronger because Europe and the Brent market is seen as more vulnerable to supply disruptions from Libya and the region.

Tension in the Middle East is like a runaway train, said Michael Hewson, an analyst at CMC Markets. Once it starts, it's very difficult to stop. And if there is a danger that it impacts the supply chain, people will understandably get nervous.

Libyan security forces fired shots and used tear gas to disperse a protest against Muammar Gaddafi's regime in the capital Tripoli. Demonstrators began the protest in the city's eastern district after Friday prayers.

Rebels fought forces loyal to Gaddafi on the outskirts of the key oil terminal of Ras Lanuf as the head of Libya's rebel council vowed victory or death.

Al Jazeera television also reported that an oil facility at Zueitina, south of Benghazi was damaged and on fire.

Libya's oil output has fallen to 700,000-750,000 barrels per day (bpd) from normal levels of 1.6 million bpd, according to Shokri Ghanem, the head of Libya's state-owned oil company, speaking to Reuters on Wednesday.

(Additional reporting by Claire Milhench in London and Florence Tan in Singapore; Editing by Marguerita Choy)

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