Markets get jitters as oil price heads for the sky
By Sean O’Grady
Wednesday, 23 February 2011
Fears that the unrest in North Africa and the Middle East could seriously disrupt oil supplies and throttle the world economy turned to reality yesterday and propelled the price of oil to more than $108 a barrel during trading, the highest since September 2008. It was $85 at the start of the year. The region supplies a third of the world’s oil needs.
Analysts said that if the unrest in Libya, a major oil exporter, spread to more important powers such as Iran and Saudi Arabia then “the sky’s the limit” for oil prices and $150 a barrel could be reached “without breaking a sweat”, with grim implications for economic recovery, inflation and living standards worldwide.
Of special concern are reports that Libyan exports are being interrupted by disorder at the terminals and major players such as Royal Dutch Shell, ENI of Italy and Repsol of Spain cutting output and evacuating staff. More than 8 per cent of Libya’s 1.6 million barrels a day of production has been shut down by the violence, which has been concentrated in the eastern province of Cyrenaica, home to the bulk of Libya’s reserves.