subject: Brent Crude hits $111.25 a barrel in London [print this page] Brent Crude hits $111.25 a barrel in London
Feb 24 (http://www.easykobo.com) - Crude oil hit $100 a barrel Wednesday for the first time in 30 months as the political crisis in Libya worsened. NYMEX WTI settled at $98.10 per barrel after crossing the $100 mark earlier in the day. The uprisings in Tunisia and Egypt earlier this month already had markets on edge before protests escalated in Libya, which has the biggest oil reserves in Africa. The rebellion widened Wednesday as protesters overwhelmed government buildings and advanced around Tripoli, the capital.
Barclays capital estimated the 58% of Libya oil producing capacity of 1.7 million barrels a dayhas been lost as oil companies such as Total, Eni, Repsol-YPF, wintershall ceased various operations and evacuated their staff from Libya. Majority of Oil companies operating in Libya are European.
The supply of Oil will hit Europe the most with countries like Ireland and Italy expected to suffer the most. Libya's high grade oil is used in making jet fuel, gasoline and Diesel, any shortage in supply could lead to a bidding war for high grade crude Oil. Nigeria stands to gain from this as "bonny light" is high grade oil. High grade oil means less sulphur content.
Brent crude prices hit $111.25 a barrel on London's ICE futures mainly because demand for high grade oil like Nigeria's "bonny light". An analyst that spoke to Easykobo said that this is good for Nigeria as it would boost the nation's foreign reserves. Nigeria budgets oil at $65 a barrel. Any excess goes into excess crude oil revenue account. "It helps in grading Nigeria's debt ratings positively." he said.
Protests in oil rich Bahrain are being closely monitored by analysts as they could spill into neighbouring Saudi Arabia and that would definitely cause a further spike in oil prices.
The sudden rise in oil prices could pose a real threat to the economic recovery which is fragile at best. Shipping cost andairline rates are set to increase. Most airline stocks fell in New York and stocks of oil companies gained.
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