Brent rose and U.S. crude oil reached a 2-1/2 year high on concerns the revolt in Libya could spread to other major oil producers as companies suspended operations and ports were disrupted.
WORLD-OIL - Oil prices keep rising with the violence in the Middle East and North Africa.
Crude jumped to its highest in more than two years when Libya descended into chaos this week.
And now International companies including BP and Shell are either cutting production or pulling out staff from Libya.
Analysts say companies could face long-term problems whether Libya's regime survives or falls.WILL HEDDEN, SALES TRADER, IG INDEX, SAYING:
"We are going to continue to see a knock-on effect form and certainly if the price continues to rise and we see further problems this isn't going to have a good effect at all and it will have the potential to derail the global recovery."
According to Goldman Sachs, if chaos continues, oil could hit $110 a barrel in coming weeks. The Russian Gas Society warns it may go as high as 120 dollars!
OPEC announced this week it will intervene if there is PHYSICAL disruption with refineries in Libya. The head of the International Energy Agency says OPEC will supply its spare capacity. In fact their message to the market is, DON'T panic. We have enough.
WILL HEDDEN, SALES TRADER, IG INDEX, SAYING:
"We know that Saudi Arabia has a large supply and the IAEA will mandate the members responsible to help increase supply."
Investors are very nervous as oil is being bought on the risk of contagion spreading through the Middle East. Some analysts say it could cause a MINI RECESSION as global consumption has been climbing since last year.
All eyes are now on Saudi Arabia and Iran as TOP suppliers to Europe and Asia.
The concern is with production of 10 million barrels a day, any HINT of disruption from these two players, could PUSH oil prices even further.
With Brent crude up by more than 10 percent since last week, the concern here for Investors AND consumers is just how high will it go?
Maryam Behmard, Reuters.