U.S. oil price briefly passes 100 USD amid Mideast unrest

13:33, February 24, 2011      

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U.S. crude oil price briefly surpassed the threshold of 100 U.S. dollars a barrel on Wednesday for the first time since Oct. 2008, amid more reports and concerns over the continued unrest in oil-rich Middle East and North Africa.

Light, sweet crude for April delivery soared 2.68 dollars, or 2.81 percent to settle at 98.10 dollars a barrel on the New York Mercantile Exchange, after briefly getting over 100 dollars at 1:08 p.m. In London, Brent crude rose 5.47 dollars, or 5.17 percent to 111.25 dollars, its highest settlement since Aug. 2008.

Amid reports of fresh violence in Libya, oil firms including Italian ENI, Repsol of Spain, Total of France, Statoil of Norway and BASF of Germany have halted much if not most of their production in that country and are moving personnel out. British oil giant BP also said earlier that they were evacuating workers.

"It truly showcases the vulnerability of current oil supplies to vagaries of geopolitics," senior analyst Conley Turner at Wall Street Strategies told Xinhua.

Libya, the eighth-largest producer in the Organization of Petroleum Exporting Countries with Africa's largest reserve of the prized "sweet" grade of crude oil, exports most of its oil to Europe, accounting for 23 percent of the oil imports of Ireland and 22 percent for Italy.

According to the International Energy Agency, Libya produces about 1.6 million barrels per day and exports 1.2 million of them.

As some unconfirmed reports indicate that part of the country's oil infrastructure may be damaged or destroyed, traders and investors fear long-lasting supply disruption and even permanent damage.

Turner said it is important to pay attention to the development of events in Bahrain, given its approximability with Saudi Arabia.

Under the current situation, it is widely expected that oil price will not go down soon, which is definitely a bad news for the still struggling world economy. Ethan Harris, economist at Bank of America every 10 dollars increase in oil prices will cost a quarter to a half percentage point of U.S. GDP growth.

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