LONDON – Oil prices rose by over $2 a barrel on Monday as a wave of U.N.-mandated airstrikes on Libya and proliferating unrest in the Middle East fanned concerns about oil supply from the region. Brent crude for May was up $1.80 to $115.73 a barrel by 1234 GMT after earlier trading over $116, while U.S. crude for April gained $1.81 at $102.88 a barrel.
“With the nature of the external military involvement becoming clearer, there is a further escalation of the situation, and the damage to infrastructure might be larger, keeping Libya out of the oil market for longer,” said Amrita Sen, an analyst at Barclays Capital.
Unrest flared in even the most authoritarian regimes in the Middle East over the weekend. In Syria, crowds set fire to ruling Baath Party headquarters, its main courts complex and phone company branches in an uprising that has resulted in at least four deaths over the past week. In Yemen, the killing of dozens of anti-government demonstrators prompted the country’s ambassador to the United Nations to resign in protest on Sunday.
A powerful Yemeni general expressed support on Monday for protesters demanding that the veteran head of state step down, referring to recent resignations of political and military figures but stopped short of announcing his own resignation. Tension also increased between Bahrain and Iran as tit-for-tat diplomatic expulsions followed Tehran’s anger at last week’s crackdown on Shi’ites. On Monday, Bahrain’s king announced a foreign plot had been foiled and thanked fellow Sunni-ruled neighbours, notably Saudi Arabia, for their support.
“The key is really how Saudi (Arabia) and Iran play out. Cool heads need to prevail. It’s contained at the moment, but if things worsen, you see a Mideast premium very quickly,” said Jonathan Barratt, managing director of Commodity Broking Services.
Saudi Arabia, a U.S. ally, has not seen the kind of mass uprisings that have rocked the Arab world this year, but dissent has built up as unrest has taken root in neighbouring Yemen, Bahrain and Oman. Dozens of Saudi men gathered outside the Interior Ministry in the capital Riyadh on Sunday to demand the release of jailed relatives amid a heavy police presence. Saudis have been warned protests will not be tolerated because they violate the Koran’s teachings.
Headlines from Japan’s troubled nuclear reactor revived worries about the country’s economy as authorities warned a turning point had not yet been reached, balancing against bullish news from the Middle East.
Oil rises $2 as Western powers strike Libya
