Oil surged to 2-1/2-year highs near $120 a barrel today as the revolt in Libya choked exports, then eased as Saudi Arabia assured European refiners the kingdom could step in to fill any supply shortfalls.
Brent crude jumped 7.5 percent as the revolt in Libya cut off up to three quarters of the OPEC nation’s 1.6 million barrels per day of production, according to Italian oil company ENI, a top player in Libya’s oil sector.
The International Energy Agency said, however, that the loss could be smaller.
The Paris-based energy adviser to 28 industrialized nations estimated that between 500,000 to 750,000 barrels per day of crude oil — less than 1 percent of global daily consumption — have been lost due to the Libyan crisis.
Oil markets, on edge that the unrest that has swept across Northern Africa could spread to other oil-producing countries, eased on news top OPEC exporter Saudi Arabia was in talks with European refiners affected by the disruption.
Forces loyal to Muammar Gaddafi launched a fierce counter-attack, fighting gun battles with rebels who have threatened the Libyan leader by seizing important towns close to the capital and key Libyan oil and oil product terminals.
“Saudi efforts to assuage supply concerns are definitely weighing on prices and if Qaddafi’s next move is out of the country, I would expect more down side,” said John Kilduff, a partner at of Again Capital LLC.
Brent crude rose $3.45 to $114.70 a barrel at 1:19 EST, after hitting a session high of $119.79, the highest since August 2008. U.S. crude rose $1.31 to $99.41 a barrel, after touching $103.41, the highest since September 2009.
The stronger gains in Brent pushed its premium to U.S. oil, which has been weighed down by high inventories at the Cushing, Oklahoma delivery point for the New York Mercantile Exchange’s U.S. oil contract, out by more than at dollar to over $14 a barrel.
Crude found some support after the U.S. Energy Information Administration (EIA) showed a lower-than-expected build in domestic crude inventories and hefty drawdowns in gasoline and distillate stocks last week.
Prices also firmed after the White House said it was not ruling anything out in its response to the Libyan government’s crackdown against a popular revolt, according to White House spokesman Jay Carney.