Oil rises after UN acts on Libya

Continue reading the main story

Oil prices have risen sharply after the United Nations authorised a no-fly zone over Libya.

Brent crude in London crude rose above $116.01 a barrel, up more than a dollar. US light, sweet crude gained $1.53 at $102.95 a barrel.

Fighting between forces loyal to Libyan leader Muammar Gaddafi and rebels has taken place during the past few weeks.

The battles come after a series of popular uprisings across the Arab world, which also pushed up oil prices.

Libyan oil production – which goes predominantly to the European market, for which Brent is the leading price benchmark – is near zero.

Col Gaddafi’s forces have recently retaken several towns seized by rebels in an uprising.

‘Roiling uncertainty’

Financial markets have been jittery all this week as events in the Middle East and Japan threatened to take a turn for the worse.

“The intensity of fighting and the targeting of oil facilities and installations has been a shock to many observers,” energy consultancy Cameron Hanover said in a report.

“This decision by the UN would seem to extend the fighting for a period of time. The oil market is confused and in a state of roiling uncertainty.”

In Bahrain, a clampdown on protesters earlier this week raised concern that unrest could spread to neighbouring Saudi Arabia, the world’s biggest crude producer.

Protests by a few hundred people in Saudi Arabia on Wednesday were put down by security forces.

The continuing nuclear crisis in Japan also continued to prey on the minds of investors, with concerns that the country is set to increase energy imports.

Japan’s nuclear capacity – which accounts for nearly 30% of electricity generation – has been crippled following a devastating earthquake and tsunami.

Eleven of its 54 nuclear reactors are not operating.