Situation in Libya affects OPEC oil price significantly

10:09, March 22, 2011      

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The weekly average price of the Organization of Petroleum Exporting Countries (OPEC) last week dropped slightly to 107.77 U.S. dollars per barrel last week, the Vienna-based cartel said Monday.

However, with the aggravation of situation in Libya once again, OPEC basket oil price has rebound strongly in the end last week.

Due to the drop during the first three days of last week, OPEC oil price began to drop after a continual rise for four consecutive weeks.

The situation in Libya of last week had obvious impact on OPEC oil price. Along with the government forces in the upper hand in fighting against rebels, the situation in Libya would be soon stable, leading to a decline in the international oil prices including the OPEC oil price.

OPEC oil price has dropped to 105.8 dollars per barrel till last Wednesday.

However, as the UN Security Council decided this month to establish a no-fly zone in Libya, OPEC oil price rebounded immediately to a high of 110.54 dollars a barrel.

The analysts believe that, along with the Western countries such as France, Britain and the U.S. started the military hit to Libya, the situation in Libya turns to be uncertain and instable again.

Although the daily production of crude oil of Libya only amounts to 1.6 million barrels, accounting for a small share in the international crude oil market, its volatile status has become a topic of market speculation regarding the oil supply stability, leading to a rise in international oil prices.

If the military attack from the Western countries could work as expected in short term, or would cause any impact on the crude oil output of other Arab countries, a new round of increase in oil price may come.

Japan is the 3rd largest crude oil importer over the world and its crude oil demand accounted for 5 percent of the global oil market.

The earthquake and tsunami hit the Japanese economy to some extent, which also led to some damage to refineries and petrochemical enterprises in Japan.

The huge natural disasters as well as the nuclear power plant accident make the future supply and demand of crude oil for Japan turn to be uncertain. It is reported that there are three refineries in Japan still closed so far, whose crude oil processing capacity amounts to 0.9 million barrels per day.

Therefore, the reopen of oil refining and petrochemical businesses in Japan, as well as the progress of reconstruction will also have an impact on the international oil prices.

Source: Xinhua
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