Oil prices rose more than two dollars in New York this morning to climb above $103 a barrel as traders fretted over the escalation of violence in Libya. Over the weekend, American and British forces, under the authority of the UN Security Council, struck key strategic targets in Libya in the first steps towards establishing a no-fly zone over the troubled region.
In London, brent crude futures for April delivery rose $1.94 to $115.87 a barrel with most observers believing prices will continue to climb.
“Prices are going to go up when there are explosions in a major oil-producing country,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Uncertainty in the Middle East is always bad for oil.”
Libya’s oil production has declined considerably since the start of the violence. At the beginning of the year, typical daily output was estimated at 1.6 million barrels a day but production has fallen to just 400,000 barrels a day since the fighting began. If full sanctions are imposed, production may be halted altogether and according to the International Energy Agency, this could last for “many months”.