Oil prices rose above $120 a barrel in London trade Monday, for the first time in two and a half years, with the market nervous over the conflict in Libya and the region.
Brent North Sea crude reached $120.63 a barrel just before 4pm GMT (6pm South African time) on the InterContinental Exchange (ICE) in London, its highest level since August 2008.
Shortly afterwards a barrel of Brent was trading at $120.13 dollars, $1.43 up from its Friday close.
“The troubles in the Middle East and North Africa continue to dominate the oil market, and are increasing concerns over supplies,” said Myrto Sokou, analyst at Sucden Financial.
Meanwhile New York’s main contract, light sweet crude for delivery in May, was trading at $108.25 per barrel at 4.15pm GMT.
Earlier in the day it hit $108.78 in Asian trading, its highest level since September 2008, on prospects of higher demand following strong United States jobs data, and as traders tracked the latest unrest in Libya.
National Australia Bank analyst Ben Westmore said traders had already priced in supply disruptions due to the ongoing Libyan conflict but warned of the effects of any spillover into the oil-rich Middle East.
Libya’s oil exports have been severely reduced since the start of its crisis.
“The important thing going forward is any news on the spread of the conflicts to other countries. That would be the thing that is not yet reflected in prices and would cause prices to push higher,” he said.
Organisation of the Petroleum Exporting Countries (Opec) member Kuwait said on Monday that oil prices were too high because of unrest in the Middle East and Japan’s earthquake.
“Although we are enjoying high prices, we would like to see lower prices… We would like to see a normal oil price,” the CEO of national conglomerate Kuwait Petroleum Corp (KPC), Faruq al-Zanki, told reporters.
He said a “normal oil price would be between $90 and $100” a barrel.
“Geopolitical concerns and fears for shrinking global spare production capacity amid ongoing demand recovery saw Brent gaining almost 25% in the first quarter while NYMEX’s crude added almost 18%,” VTB Capital analyst Andrey Kryuchenkov noted. – AFP