Oil rises to near $88 as Libya protests spread
SINGAPORE — Oil prices jumped to near $88 a barrel Monday in Asia amid investor concern that the violent protests spreading in Libya could disrupt crude supplies from the OPEC nation.
Benchmark crude for March delivery was up $1.67 at $87.87 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to settle at $86.20 on Friday.
In London, Brent crude for April delivery gained $1.78 to $104.30 a barrel on the ICE Futures exchange.
On Sunday, Seif al-Islam Gadhafi, son of Libyan leader Moammar Gadhafi, warned protesters that they risked igniting a civil war in which Libya's oil wealth "will be burned." Libya exports about 1.0 million barrels of crude a day.
Earlier Sunday, anti-government demonstrations spread to the Libyan capital of Tripoli and protesters seized military bases and weapons. In the eastern city of Benghazi, about 60 people were killed, while more than 200 have died since the unrest began seven days ago.
Oil traders are also closely watching recent protests in Iran, which is the second-largest crude exporter in the Organization of Petroleum Exporting Countries behind Saudi Arabia.
"The concerns in the market go beyond Libya," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "It's unlikely we're going to see any meaningful disruption of oil from the Middle East or North Africa, but the spread of this unrest has raised anxieties."
Some analysts are worried higher oil prices will undermine a fragile economic recovery in developed countries. For every $1 increase in the price of a gallon of gasoline, U.S. consumer spending falls by about $120 billion, said Gerard Minack, an economist with Morgan Stanley.
"Energy is more important for developed-world consumers than food," Minack said. "This is why further sharp rises in oil prices, if they occur, would be likely to be seen as a threat to growth."
In other Nymex trading in March contracts, heating oil rose 4.7 cents to $2.76 a gallon and gasoline gained 3.9 cents to $2.59 a gallon. Natural gas futures were ateady at $3.88 per 1,000 cubic feet.