Oil Rises On Libya Supply Concerns, Gas Prices Soar

Oil rose Wednesday for a fifth day, with futures hitting a two-year high in New York, after major political upheaval in Libya interrupted oil production in the country.

West Texas Intermediate jumped nearly 7 percent to $94 per barrel for March and jumped to $95.59 per barrel for the April contract. In London Brent crude oil futures for April delivery rose to $107 per barrel, a two and a half year high. Analysts predict London will see Brent crude rise to $110 per barrel in the coming weeks.

Several international companies have suspended oil production in the country, including Repsol YPF and Wintershall. In addition other companies, like Total, BP, Statoil and Epi, have moved expatriate workers out of the country and have said they expect to see an impact in production.

Libya produces 1.6 million barrels of high quality crude per day and is the world’s 17th largest producer in the world. It is also home to Africa’s largest crude oil reserves. It’s estimated that 100,000 barrels per day, about 6 percent of Libya’s production has been lost as a result of the recent violent outbreaks in the country.

Libya exports some 83% of its daily production, consuming just 270,000 barrels a day. A majority of the oil goes to Europe, mainly Italy and Germany. Another 13 percent is sent to Asia and the U.S. receives about 5 percent of the country’s export.

On Tuesday the Italian government reported that oil deliveries from Libyan ports were disrupted due to a lack of communication. That same day reports emerged that operations in Benghazi, Tripoli and Misurata Mediterranean ports had closed.

Production in the Nafoora oilfield has reportedly stopped. Nafoora sits in the Sirte Basin, home to 80 percent of Libya’s proven reserves.

Saudi Oil Minister Ali Naimi said Tuesday that his country has the ability to ramp up production from their current level of 8 million barrels per day to 12.5 million barrels per day to compensate for any global shortages.

Analyst say the rise in oil prices Tuesday was in part due to fear that the uprise in Libya would spread to its oil-producing neighbors, including Saudi Arabia and Iraq.

In the past two weeks average gasoline prices in the U.S. have jumped 5 cents to $3.19 per gallon and in Europe unleaded has jumped to more $8 per gallon.