Oil prices top $101 per barrel again


NEW YORK – Oil prices soared more than 3 percent, climbing back above $101 per barrel Thursday after a crackdown on protesters in Bahrain increased concerns that unrest there threatens to spread to OPEC heavyweights Saudi Arabia and Iran.

Prices are also rising as Japan is expected to boost fuel imports as it recovers from its earthquake and tsunami disaster. And the world’s largest oil consumer, the U.S., reported Thursday that unemployment claims dropped to the lowest level since July 2008, raising hopes that oil and gasoline demand will soon increase.

Benchmark crude added $3.23 at $101.21 per barrel in afternoon trading on the New York Mercantile Exchange. In London, Brent crude rose $3.77 to $114.21 per barrel on the ICE Futures exchange.

Oil prices have been pushed and pulled in recent weeks by various international crises that could have major impacts on world oil supplies and demand.

The rebellion in Libya has forced the country to halt oil shipments of about 1.5 million barrels per day. Libya produced about 2 percent of the world’s oil. Saudi Arabia and other OPEC nations have said they will increase production to cover shortfalls of Libyan oil, which goes mostly to Europe.

On Thursday forces loyal to Moammar Gadhafi continued to advance against rebels in the eastern part of Libya. Gadhafi’s rapid advance seems to have spurred the U.S. to push for broader U.N. authorization for international air, sea and land forces to stop Gadhafi’s attacks on his own people. The U.S. has said it would not act without United Nations authority. Security Council members appear divided on the matter, with China and Russia and China doubtful about other countries getting involved in Libya’s affairs.

Protests in Bahrain led by Shi’ite Muslims have raised concerns further about the stability of the Middle East. The tiny country doesn’t have much oil of its own, but Bahrain is just 15 miles from the Saudi Arabia border and the violence could deepen sectarian divisions between Sunni and Shi’ite Muslims in the region.

Saudi Arabia, ruled by Sunnis, is the world’s largest oil exporter and produces about 8.4 million barrels per day, enough to satisfy about 8 percent of world demand.

The Saudis have sent troops to Bahrain as part of a multinational force defending the monarchy there. That move was sharply criticized by Iran’s Shi’ite leadership, which recalled its ambassador to Saudi Arabia on Thursday.

Helima Croft, an analyst with Barclays Capital, said Bahrain could become the new “central front” in an ongoing power struggle between Saudi Arabia and Iran. The violence also could hurt the Saudi’s diplomatic relationship with the U.S. That would send shockwaves through oil markets, Croft said.

Saudi Arabia is the only country with enough spare oil production to meet increased world demand “and thus the last word on any attempt to drive down prices through production increases,” she said. Analysts say the Saudis can boost their daily production by more than four million barrels.

Meanwhile, there was positive economic news in the U.S. The Labor Department said Thursday that applications for unemployment benefits fell last week, signaling modest job growth. And FedEx Corp. reported higher quarterly revenue, although profits were hurt by higher fuel prices and severe winter weather. Stock markets bounced back after taking a beating on Wednesday. The Dow Jones Industrial Average was up 112 points in afternoon trading. The Nasdaq and the Standard & Poor’s 500 were higher as well.

Gasoline pump prices dipped for a third day, to $3.546 per gallon, though the national average is still up about 42 cents per gallon since the middle of February. A gallon of regular unleaded is 75.7 cents more expensive than last year.

In other Nymex trading for April contracts, heating oil gained 6 cents at $3.0564 per gallon and gasoline futures added 9 cents at $2.9377 per gallon. Natural gas rose 17 cents to $4.112 per 1,000 cubic feet. In its weekly report, the Energy Department said the nation’s natural gas supplies shrank by 56 billion cubic feet. Supplies are about 1.4 percent above the five-year average.

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