The weekly average price of the Organisation of Petroleum Exporting Countries (OPEC) continued to rebound last week, growing to $108.44 per barrel, the Vienna-based cartel said Monday. Crude prices rose in Asian trade as regional equities markets surged on optimism sparked by a European summit aimed at resolving the eurozone debt crisis, analysts said.
The death of former Libyan leader Muammar Gaddafi and the prospect of the European debt crisis being settled are the two major factors behind the recent price rebound.
On the one hand, the confirmation of Gaddafi’s death is believed by international oil investors to have removed the largest uncertainty over Libya’s oil exports.
Libya is one of the most important sources for European oil and gas. About 88 per cent of its crude oil production was exported to Europe, among which 28 per cent went to Italy, 15 per cent to France, and about 10 per cent to both Germany and Spain.
The stop of crude oil exports from the North African country caused by its conflicts resulted in a price hike in the international oil market, and OPEC oil price once rose to 120 dollars a barrel in April this year. The European refineries that heavily depend on Libya’s light sweet crude oil were seriously affected.
With the end of Libyan conflicts having been announced, the recovery of the country’s oil production is expected.
However, analysts believe that the situation of Libya would remain unstable for a while. If the new government can not be established soon, the country would fall into chaos or even civil war once again. In addition, it would take some time for the war-torn country to restore pre-war oil production level. On the other hand, the global oil prices were also bolstered by the prospect of the ongoing European debt crisis being settled. The meeting of eurozone finance ministers held last Friday in Brussels decided to approve the sixth round of aid loans to Greece totalling 8 billion euros (11.1 billion dollars), which has enhanced people’s confidence in the settlement of the debt crisis. But analysts also pointed out that the crisis may be more difficult to settle than expected. As Greece’s economic situation is worse than expected, the European Union (EU) aid program introduced in July has been inadequate. How to effectively help Greece is a new problem for eurozone countries. Moreover, the difference between Germany and France also casts the settlement of the crisis into the shade. For the above reasons, the trend of the global oil price remains uncertain in days to come.
