LONDON (AFP) – World oil prices rallied on Monday after Western air strikes were launched on key crude exporter Libya over the weekend.
New York’s main contract, light sweet crude for delivery in April, added $2.10 to $103.17 a barrel.
In London early afternoon trade, Brent North Sea crude for May won $2.22 to $116.15 per barrel.
French, American and British forces have launched the biggest intervention in the Arab world since the 2003 US-led invasion of Iraq, firing more than 120 Tomahawk Cruise missiles and conducting bombing raids into Libya on Saturday.
The action by the US, Britain and France came after the UN Security Council authorised the use of “all necessary means” to protect civilians and enforce a ceasefire and no-fly zone against Libyan leader Moamer Kadhafi’s forces.
“Oil prices have gone up due to military attacks in Libya from UN forces,” said Victor Shum, senior principal for Purvin and Gertz international energy consultants in Singapore.”
“More oil installations could be damaged due to collateral damage and internal sabotage,” Shum told AFP.
“The unrest in the Middle East and North African region may spread to other (parts of the) region, and hence the contagion effect on oil prices remain. Oil supply disruption is going to support prices in its triple digits.”
Kadhafi has continued attacking rebels after an uprising against his four-decade-old regime following similar movements in Egypt and Tunisia that rocked the region and sent oil prices soaring.
Before the unrest, Libya was producing 1.69 million barrels a day, according to the International Energy Agency. Of this 1.2 million barrels were exported, mostly to Europe. Other major customers are China and the United States.
“In the short term, the attacks of the coalition do not change much as exports were already down to almost zero,” noted PetroMatrix analyst Olivier Jakob in Zurich.
“Having a view on how long it will take before oil can flow again is too difficult at this stage as the map is changing from hour to hour.
“A stalemate at current positions leaves most of the oil export ports in the hands of the Kadhafi regime.”
An airstrike against an administrative building in a compound including Kadhafi’s residence in Tripoli destroyed the Libyan leader’s “command and control capability,” a coalition official told AFP.
“The coalition is actively enforcing UNSCR (UN Security Council Resolution) 1973, and that in keeping with that mission, we continue to strike those targets which pose a direct threat to the Libyan people and to our ability to implement the no-fly zone,” the official said Sunday.
The building, which was about 50 meters (165 feet) from the tent where Kadhafi generally meets guests, was flattened.