Brent crude rose back closer to two-and-a-half year highs Wednesday as Libya’s Muammar Gaddafi vowed to resist rebellion to the end and his top oil official warned of higher oil prices.
“We will fight until the last man and last woman to defend Libya,” Gaddafi told supporters.
Falls in U.S. oil inventories also boosted prices, brokers said.
Brent crude for April gained 60 cents to $116.02 a barrel at 1341 GMT (1:41 p.m. British time) against the recent peak of $119.79 hit on February 24.
U.S. April crude futures rallied to as high as $101.30 shortly after the U.S. market opened, and was up by $1.40 a barrel around the same time.
“Crude is continuing to climb after a bullish close yesterday and the bullish API inventories and Gaddafi’s speech saying he will fight to the end,” said Tom Brentz, broker at BNP Paribas Commodity Futures Inc in New York.
Shokri Ghanem, chairman of Libya’s National Oil Corporation, told Reuters in an interview that Libya’s troubles had created its worst energy crisis in decades and supply cuts to world markets could push oil above $130 a barrel in the next month if troubles persist.
Ghanem said crude oil output had dropped to 700,000-750,000 barrels per day, from a pre-crisis 1.6 million bpd, after the flight of most of the foreign workers who make up about 10 percent of the Libyan energy industry’s labour forces.
“The question is what will be the outcome over the next few days — will there be a full stoppage as the evacuation of personnel from Libya continues?” said Harry Tchilinguirian, head of commodity market strategy at BNP Paribas. Markets had become more volatile and moves of a dollar in either direction had lost significance, he added.
Some oil exports from Libya continued.
Two Greek tankers left the Libyan port of Es Sider on Tuesday, but concerns about potential violations of recently imposed U.S. sanctions against Libya left a cargo sitting off the coast of Texas and Louisiana in the United States.
RISK OF CONTAGION
Governments in Yemen, Oman, Iran and Iraq have had clashes with protesters over the past fortnight as popular unrest has spread in the region holding more than 60 percent of the world’s reserves.
“Oil prices are subject to the ebb and flow of news out of the Middle East … there’s a good chance of Brent rising to $120 over the next couple of days,” said Michael Hewson, a market analyst at CMC markets.
Last week Brent crude futures rallied to 2-1/2-year peak over $118 on disrupted supply from Libya, but fell back as a boost in Saudi Arabian output was expected to fill in for the loss of Libyan oil.
