Oil prices settle above US$101

NEW YORK—Oil prices soared more than 3.5 per cent, climbing back above US$101 per barrel yesterday after a crackdown on protesters in Bahrain and the US pressed for UN action against Libya’s Muammar Gaddafi. Prices also rose on the expectation that Japan will boost fuel imports as it recovers from its earthquake and tsunami disaster. And the world’s largest oil consumer, the US, reported that unemployment claims dropped to the lowest level since July 2008, raising hopes that oil and gasoline demand will soon increase. Benchmark crude added US$3.44 to settle at US$101.42 per barrel on the New York Mercantile Exchange. In London, Brent crude rose US$4.15 to US$114.59 per barrel on the ICE Futures exchange. Oil prices have been pushed and pulled in recent weeks by international crises that could have major impacts on world oil supplies and demand. The rebellion in Libya has halted oil shipments of about 1.5 million barrels per day from that country. Libya produced about 2 per cent 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.

Yesterday, forces loyal to Muammar Gaddafi continued to advance against rebels in the eastern part of Libya. Gaddafi’s rapid advance seems to have spurred the US to push for broader UN authorisation for international air, sea and land forces to stop Gaddafi’s attacks on his own people. The US has said it would not act without United Nations authority. Security Council members appear divided on the matter, with China and Russia doubtful about other countries getting involved in Libya’s affairs. Protests in Bahrain led by Shi’ite Muslims have raised further concerns 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 per cent of world demand. The Saudis have sent troops to Bahrain as part of a multinational force defending the monarchy there. That move was sharply criticised by Iran’s Shi’ite leadership, which recalled its ambassador to Saudi Arabia. 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 US That would send shockwaves through oil markets, Croft said. (AP)