Nymex Crude Higher as Unrest Spreads to Iran
Source: Dow Jones, Jerry DiColo (3/1/11)
"Oil futures remain >13% higher than before the crisis in Libya began."
Light sweet crude oil for April delivery recently traded 1.4% higher at $98.31/bbl on the Nymex. Brent crude on the ICE futures exchange traded $1.75 higher at $113.55/bbl.
Oil markets focused on reports of increasing violence in the the Middle East, with unrest in Iran gaining attention. Iranian security forces fired tear gas in clashes Tuesday with protesters demanding the release of opposition leaders.
Meanwhile, the Libyan crisis continued as rebels repelled an attack from troops loyal to Gaddafi in the oil city of Zawiya overnight. The U.S. and other members of the international community have increased efforts to pressure Gaddafi to step down.
Growing unrest across the Middle East and North Africa, and the threat of increasing violence, has kept concerns high that crude-oil supplies could be curtailed. Despite falling back from above $100/bbl last week, oil futures remain more than 13% higher than before the crisis in Libya began.
"When the risk is in so many different countries having unrest or negative developments, it's only natural that we see markets back up around these levels," said Matt Smith, an oil analyst at Summit Energy. "Even if things calm down in Libya, we're looking at Oman, Iran."
Saudi Arabia has increased oil production in an effort to make up for a drop in production in Libya, where officials estimate more than half of its output of 1.6 Mbpd may be curtailed.
Saudi Arabia is producing at a rate of 9 Mbpd—up ~500,000 bpd from before Libyan protests began. Kuwait has also indicated it could employ its spare production capacity of ~200,000 bpd if more of Libya's output is shut down.