Brent crude futures climbed above $110 a barrel today as turmoil in Libya fuelled fears that unrest could spread to other oil-producing nations and choke supplies.
ICE Brent April crude futures were $4.46 to $110.22 a barrel this afternoon, after reaching an intraday high of $110.26 a barrel, trading at levels not seen since early September 2008.
US light crude futures were $2.48 stronger at $97.90 a barrel, the strongest price since early October 2008.
Between 300,000-400,000 barrels per day (bpd) of Libyan output has been shut down, marking the first cut in oil supplies related to the recent wave of protests in North Africa and the Middle East.
Analysts said that should the unrest bring production to a halt in both Libya and Algeria, Nomura analysts said oil prices could peak at $220 a barrel.
Governments across the world moved to send planes and ships to evacuate citizens from Libya, whose leader Muammar Gaddafi has vowed to crush the revolt.
Focus was also on top exporter Saudi Arabia, where ruling King Abdullah unveiled a package of benefits worth billions of riyals to mark his return today after months of medical treatment abroad.
Jittery investors are worried about further supply disruption if protests spread in the country, which supplies around 10% of the world's oil and holds most of the world's spare capacity. Saudi yesterday stopped short of pumping more oil to calm markets, saying prices were driven by fear.
The International Energy Agency's executive director Nobuo Tanaka said prices above $100 per barrel for the rest of the year could drag the global economy back into a repeat of the 2008 economic crisis.
Analysts said US light crude futures, also known as West Texas Intermediate (WTI) remained well supported following the roll of the contract, but noted that a potential build-up of weekly US crude oil stockpile data due later could pressure prices.
Libyan oil output down more than a quarter
More than a quarter of OPEC member Libya's oil output has been shut down, Reuters calculations showed today, as unrest prompted oil firms to warn of production cuts in Africa's third-largest producer.
Oil topped $110 a barrel for the first time since 2008 because of the disruption, even though Saudi Arabia has said other members of the Organisation of the Petroleum Exporting Countries would be ready to meet any shortages.
Austria's OMV said it might be heading for a full production shutdown in Libya. Total, Repsol, Eni and BASF have also said they are either slowing or stopping output.
The latest comments point to a growing impact on oil output from Libya, which produces 1.6 million barrels per day (bpd) of high-quality oil, or almost 2% of world output. About 1.3 million bpd is exported, mainly to Europe.
The figures given by oil companies and industry sources so far indicate that some 400,000 bpd of Libyan output - a quarter of the total - has been stopped.
The total is probably higher since it excludes Italy's Eni, which said yesterday that it had suspended 'some' Libyan output without giving details. Libya provided Eni with oil production of 108,000 bpd in 2009, the latest data available shows.
Information on the country's output can be conflicting as oil firms often speak of their share of production and do not give overall supply at fields they operate or participate in.
'We have started to suspend our production. It is still too early to estimate the impact on our production,' a spokeswoman for France's Total said. Total gets 55,000 bpd from Libya.
Most of Libya's oil production operations are in the east of the country south of Benghazi. That city and most of eastern Libya have not been under central control since an uprising last week against the rule of Libyan leader Muammar Gaddafi.
While lifting the price of oil, the Libyan production shutdowns weighed on the shares of some of the afflicted companies.
Shares in OMV tumbled 5% on the news in Libya, which provided the company with 33,000 barrels of oil equivalent per day of output in 2010, around a tenth of its total output.
Spain's Repsol and Italy's Eni said yesterday they had shut down Libyan production. BASF unit Wintershall said today it had stopped as much as 100,000 bpd of output, having said on Monday it was preparing to do so.
Repsol said it had shut the El-Sharara oilfield, which an industry source said pumps about 200,000 bpd - a figure equal to 13% of the country's output.
Libyan export terminals that ship both crude and oil products have been disrupted but supplies have not stopped flowing. At least three cargoes have left Libyan ports in the past 24 hours, trade and shipping sources said today.
One tanker carrying 600,000 barrels of crude oil had loaded from Es Sider, close to the major export terminal Ras Lanuf.
