Nigeria: Libya Crises – Oil Prices May Rise Further

3 May 2011

Investors and traders may further push up oil prices this week, following adverse news of the escalation of the war between Libyan strongman, Muammar Gaddafi and the rebels and NATO forces, coupled with the Syrian crisis in the Middle East.

Crude oil prices showed a steady rise throughout last week as the turmoil escalated, in addition to the worsening economy of the United States, according to a report on Trading Energy.

Reuters had reported that oil prices pushed higher on Friday, posting an eighth straight month of gains as a result of the weakening dollar and the crisis in Libya and the Middle East.

Brent crude for June delivery settled at $125.89 a barrel, gaining 7.3 percent for the month, touching a 2011 high of $127.02 on April 11.

United States crude settled up $1.07 at $113.93 a barrel after touching $114.18 earlier, the highest daily price variation since prices reached $130 on September 22, 2008.

It is however predicted that volatility and uncertainty associated with the escalating Libyan conflict will further affect market forces and push up oil prices.

The conflict has already spilled beyond its borders as forces loyal to leader Gaddafi reportedly attacked the Tunisian town of Dehiba, near the Libyan border.

Morocco, which borders Algeria, a major oil and gas producer and member of the Organisation of Petroleum Exporting Countries (OPEC), has also alleged that a bomb that killed at least 14 people last week was a terrorist act.

Tensions have also escalated in Syria as thousands of protesters rallied across the country demanding political freedoms and these will potentially affect crude oil prices.

The crisis in Libya worsened as the country’s authorities confirmed that Gaddafi’s youngest son and three grandchildren were killed in a NATO air strike.

The President of Venezuela, another major oil producer, President Hugo Chavez, called the attack attempted murder.

“There is no doubt the order was given to kill Gaddafi. It doesn’t matter who else is killed, kill Gaddafi … a murder, this is a murder,” he said.

According to agency reports, Libyan government spokesman Mussa Ibrahim said Gaddafi was unharmed and in good health despite what he called “a direct operation to assassinate the leader of this country.”

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