effect oil prices on The Libyan crisis

effect oil prices on The Libyan crisis : impact of the Libyan crisis on oil prices : UN military action against Libyan leader Muammar Gaddafi has echoed the use of international force against Iraq under Saddam Hussein, but for the oil market the implications are very different.

A look at some of the issues at stake:


Effect on oil prices

Oil prices briefly spiked to a high of $39.99 before the US-led invasion of Iraq in 2003 and then dropped back.

After Iraq's invasion of Kuwait in August 1990, US crude climbed above $40 in October of that year and was falling by the time of the intervention of UN forces in January-February 1991, which ended the occupation.

Concern about the loss of oil from OPEC member Libya and the possibility of unrest across the Middle East drove Brent futures to a two-and-a-half year of nearly $120 last month.

They remain around $115, but analysts said the mood was cautious as traders tackled extreme levels of uncertainty.

Impact on oil exports

Iraq's oil production shrank from more than 2 million bpd to less than half a million bpd in 1991, recovering to nearly pre-1990 levels a decade later and only briefly crashing in 2003.

Before violence erupted in Libya earlier this year, the OPEC member was producing around 1.6 million bpd.

Its production has collapsed to 200,000-300,000 bpd, analysts have estimated, and exports have dried up, with many in the oil market assuming they will remain at a standstill for months to come.

Some have argued disruption will continue for the rest of this year and beyond.

Analysts draw the contrast between the mission statement of the 2003 invasion of Iraq when regime change was a clear US objective.

This time, the United States, under President Barack Obama has adopted a low profile, and said Libyans must ultimately determine their fate for themselves.

At the same time, the market is contemplating the possibility of much wider unrest as popular discontent reaches into Syria, Yemen, Oman, Bahrain and possibly even Saudi Arabia.

Some analysts said removing Gaddafi would be the most positive outcome for oil exports as it could mean an early end to sanctions.

The Arabian Gulf Oil Company, or Agoco, which is headquartered in rebel stronghold Benghazi, said it was making arrangements to market oil directly to foreign buyers instead of via its state-owned parent but no sales have been reported. For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post: