LITTLE ROCK — Fears that Libya is falling into chaos pushed oil prices sharply higher Monday and weighed on foreign stock exchanges.
Unlike Tunisia and Egypt, which have already seen popular uprisings that deposed longtime leaders, Libya is a member of the Organization of Petroleum Exporting Countries cartel and one of Africa’s biggest oil producers.
Libya accounts for about 2 percent of global daily crude output and has the biggest proven oil reserves in Africa. Before the weekend’s violence, three leading oil companies in Libya - Italy’s ENI, Norway’s Statoil and Britain’s BP - had been making plans to evacuate some employees.
“Libya is the first major oil exporter to be engulfed by the crisis and the first to see significant disruption to oil production,” said Julian Jessop, chief international economist at Capital Economics.
In addition to Libya, the industry is closely watching protests in Algeria, Bahrain and Iran, the second largest crude exporter in the OPEC 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.”
In London on Monday, the benchmark price of crude oil surged $5.48, or more than 5 percent, to $108 a barrel. U.S. oil prices also jumped, rising $5.22, or 6 percent, to $91.42 a barrel in electronic trading. U.S. prices lately have been consistently below the London price because the United States is less reliant than Europe on Middle Eastern oil. Also, U.S. crude inventories have been near record highs.
Libya sells about 80 percent of its 1.5 million-barrel daily output to Europe.
In Arkansas, the average price of a gallon of gasoline Monday was $3.028, up from $2.985 a week ago, according to AAA.
In Europe, Germany’s DAX stock index closed down 105 points, or 1.4 percent, at 7,321.81 while the CAC-40 in Paris fell 59.73 points, or 1.4 percent, to 4,097.41. The FTSE 100 index of leading British shares fell 68.19 points, or 1.1 percent, to 6,014.80.
Markets in the U.S. were closed Monday for the Washington’s Birthday holiday.
An ounce of gold jumped more than $17 to $1,406.
David Buik, markets analyst at BGC Partners in London, noted that Seif al-Islam Gadhafi’s comments that there would be “rivers of blood” in Libya had also prompted the surge in gold prices.
“There was a feeling by unsettled investors of a need to take yet another flight to quality,” he said.
Gadhafi also said protesters risked igniting a war in which Libya’s oil wealth “will be burned.”
Oil-consuming nations have emergency reserves they can use to stabilize markets in case the violence in Libya and the wider Middle East escalates and crimps production, officials said Monday.
International executives and analysts meeting in London were nervously watching developments in the oil-rich region.
David Fyfe, head of the oil industry and markets division at the International Energy Agency, said agency member countries have reserves of 1.6 billion barrels of oil - equivalent to some 4 million barrels per day for the next 12 months - that could be brought onto the market if necessary.
The agency’s 28 members are mainly oil-consuming industrial nations such as the United States, Japan, Britain and Germany.
The International Energy Agency has used government stocks to steady the oil market only twice before, during the first Gulf War in 1991 and after Hurricane Katrina hit the Gulf of Mexico in 2005.
“It’s very much a last resort, but it’s worth pointing out that it exists and has been used before when supplies have been disrupted,” he said.
Oil market supply and demand is balanced and inventories are ample, Saudi Arabia’s second most senior energy official said Monday.
“We have a well-balanced market today and oil stocks at a very comfortable level,” Prince Abdulaziz bin Salman, Saudi Arabia’s assistant minister for petroleum affairs, told reporters at a news conference in Riyadh. “There is an abundant amount of oil in the market.”
BP has suspended operations and is evacuating approximately 40 expatriate employees and their families - halting operations in the North African country just four years after the British company returned from a 30-year hiatus.
“Events in the Middle East are of intense concern as they continue to evolve,” said Ian Smale, group head of strategy and policy at BP PLC. “With specific regard to Libya, our first concern is our people and the security and integrity of our operations.”
Italy’s Eni gas and oil company said in a statement that it was evacuating nonessential employees and relatives of expatriate workers in Libya “as already scheduled following the early closure of schools in the country.”
In the United States, Conoco Phillips spokesman John McLemore said the company is monitoring the situation but had no comment.
Information for this article was contributed by Pan Pylas, Joshua Freed and Jane Wardell of The Associated Press, Wael Mahdi of Bloomberg News and Neela Banerjee and Ronald D. White of the Tribune Washington Bureau.
Front Section, Pages 1 on 02/22/2011