An oil rig is shown in this file photo.
An oil rig is shown in this file photo.

Oil higher, Libya crisis eyed

By Time of article published Aug 23, 2011

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Crude rose in Asia Tuesday as traders monitored the crisis in Libya, with rebels claiming victory but one of Moamer Kadhafi's sons insisting his father was still in control, analysts said.

Also supporting prices was expectations that it could take years before the North African country's oil output is back to pre-revolution levels.

Brent North Sea crude for October delivery rose 39 cents to $108.75 a barrel from Monday's close of $108.36.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for October delivery rose 64 cents to $85.06.

Brent in particular experienced sharp swings, with the October contract losing as much as 18 cents at one point a day after it tumbled as it emerged that Libyan rebels were on the verge of toppling Kadhafi.

“You would have expected Brent (price) to be bearish now but that could be because the market is waiting for a direction,” said Shailaja Nair, managing editor with energy news specialist Platts' Asia desk in Singapore.

“Until it reaches a conclusion one way or the other, you are going to see volatility in prices,” she told AFP.

Brent is more affected than WTI by the situation in Libya as oil from the North Sea as well as from Libya serve the European markets.

Around 85 percent of Libyan oil output was exported to Europe until the revolt disrupted the country's production six months ago.

Libya's rebels declared the “Kadhafi era” over after taking charge of most of Tripoli, but his son Seif al-Islam claimed Tuesday his father was still in control of the capital.

“Tripoli is under our control. Everyone should rest assured. All is well in Tripoli,” he told journalists outside Kadhafi's compound at Bab al-Azizya.

Meanwhile, analysts cautioned it could take Libya two years to restore oil production to pre-revolt levels and that disputes over who would hold power in any post-Kadhafi regime could also delay rebuilding the economy.

The lack of any strong institutions was another factor that could impede the country's road back to resuming full-scale crude production, they said.

“I don't think they can resume production immediately. It might take place in three or four months but to go back to the level they used to produce, it may take two years,” Shukri Ghanem, the exiled former Libyan oil minister, told Platts on Monday.

Before the uprising began in February, Libya produced about 1.6 million barrels per day and exported 1.3 million, much of it light crude highly valued by Europe's refiners, which have struggled to replace it. - Sapa-AFP

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