Reuters: Oil prices will increase dramatically because of the military operation in Libya

The war against Libya will raise oil prices dramatically in the next week, predicted Reuters in its analysis. According to the agency, the situation in the Jamahiriya will take precedence over the speculations that there will be a decline in the value of the raw material because of the earthquake in Japan and the tightening of the monetary policy in China.

Analysts expect the price of Brent oil to rise to $119.79 today, which will be the highest level since February, compared to $113.93 per barrel in Friday’s trading. US crude oil price will rise above 4%, according to estimates.

The tensions in the region, which started in Tunisia and spread to Egypt, Yemen, Bahrain and Libya, helped oil prices rise by 20% since the beginning of the year. The Brent oil hit $120 per barrel which brought it closer to the record price of almost $ 150 a barrel from the middle of 2008. In March alone, the price of Brent oil rose by over 2%, despite the anticipated lower demand after the earthquake in Japan.

Shokri Ghanem, Head of the Libyan state oil company National Oil Corp., said that oil production in the country after the attacks was already below 400, 000 barrels per day given that the daily capacity was of 1.6 mln barrels, posted Bloomberg. He expressed concern that the reluctance of Western companies to work in the country can lead to the complete suspension of extraction. He said this would lead to natural deficit of the raw material because Saudi Arabia would not be able to fully cover the shortage.

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