Libya Violence Sends Oil Prices Soaring

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"The IEA will discuss whether to tap strategic oil stockpiles."

Escalating violence in Libya pushed oil prices sharply higher Tuesday, as the unrest sweeping the greater Middle East shows no signs of abating.

The North African nation, a member of the Organization of Petroleum Exporting Countries, holds the largest reserves in Africa and accounts for about 1.7% of world crude output. The unrest in Libya has caused about 50,000 barrels a day of oil output to be shut down, an official at the International Energy Agency said Monday.

Light, sweet crude for March delivery soared $4.87, or 5.7%, to $91.07 a barrel from Friday's settlement on the New York Mercantile Exchange, after rising to as high as $94.49 a barrel in intraday trading. The contract expires at the end of trading Tuesday. The more heavily traded April contract rose $4.86, or 5.4%, to $94.57 a barrel.

OPEC said its basket of 12 crudes rose to $100.59 a barrel Monday, up from $99.08 Friday, marking the first time the basket surpassed $100 a barrel in 2 1/2 years.

"Traders are concerned about potential loss of supply," said Andy Lebow, oil analyst at MF Global in New York. "We can ill afford the loss of Libyan production."

Libyan leader Col. Moammar Gadhafi crushed antigovernment protests across the country Monday, sending mercenary soldiers to the capital and ordering military aircraft to open fire on demonstrators. Military, police and diplomats abandoned government posts and eastern portions of the country fell to anti-Gadhafi forces.

The IEA will discuss at a governor's board meeting this week whether to tap strategic oil stockpiles.

Libya's oil is mainly sold to its Oilinvest marketing network in Europe, Italy being the biggest buyer, according to the IEA. France, Germany and Spain are also large importers.

The White House said Tuesday it is monitoring the situation in Libya.

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