Libya declared force majeure on oil- product exports, and imports are also blocked, Reuters reported, citing trade sources it didn’t identify.
Crude Oil surged to the highest price in more than two years as violence intensified in Libya, the holder of Africa’s largest crude reserves. Libyan leader Moammar Gadhafi said on state-run TV that the police and army will impose order, vowing to use force if necessary. Gadhafi’s crackdown on the weeklong uprising has already left more than 200 dead, according to Human Rights Watch.
Crude for March delivery gained $5.62, or 6.5 percent, to $91.82 a barrel at 1:18 p.m. on the New York Mercantile Exchange after rising to $94.49 a barrel, the highest intraday price since Oct. 3, 2008.
Force majeure is a legal clause allowing producers to miss contractual obligations due to circumstances beyond their control.
Prices pared gains after Saudi Arabian Oil Minister Ali al- Naimi said there is “absolutely no shortage of supply” and that members of the Organization of Petroleum Exporting Countries will be ready to meet a shortfall if one develops.
The unrest in Libya will have limited impact on oil production as other OPEC members have enough spare capacities, Commerzbank AG said.
“As long as the conflict is restricted to Libya, OPEC could easily cope with Libya’s total absence from the market given the spare production capacities of 5-6 million barrels a day and Libya’s current daily output of 1.6 million barrels,” Commerzbank analysts led by Eugen Weinberg said in a report to clients today.
OPEC can produce 34.8 million barrels a day, according to data compiled by Bloomberg News. The 12 countries pumped 29.4 million barrels a day in January, according to the data.
Libya, an OPEC member, produced 1.585 million barrels a day in January, according to Bloomberg data.
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