Brent crude prices topped $122 a barrel today as oil prices traded at their highest levels in 2 1/2 years since the highs of 2008.
“The whole commodity complex seems to be on the boil again,” said Edward Meir at MF Global, discussing the continued violence in Libya, Yemen and political unrest in Nigeria over delayed elections.
China’s announced an increase in interest rates which briefly triggered a price decline of about $1/barrel in early trading. However, the effect was quickly reversed as traders feared the events in Nigeria would further constrict global supply of highly desired light, sweet crude.
Saudi Arabia has boosted output to make up for missing capacity from Libya, but will it be enough? “Spare capacity is eroding and together with the geopolitical backdrop where Nigerian outages are very much on the cards with the upcoming elections, upward pressures on prices could well continue,” writes Barclays analyst Amrita Sen in a note.
Skyrocketing oil prices have prompted responses from global leaders. UK Energy and Climate Secretary Chris Huhne and Saudi Arabian Oil Minister Ali Ibrahim Al-Naimi both made public statements addressing the major run-up in oil prices in the marketplace this week prior to a meeting in Riyadh.
The current oil price – which reached levels not seen since the all-time record set in the summer of 2008 – does not “reflect the realities” of supply and demand as they really exist in the global energy market, said Mr. Huhne, who called for “greater understanding between consumer and producer countries” in an effort to avoid inflation.
Former Saudi oil minister Sheikh Zaki Yamani has warned that continued political unrest could push barrel prices in the $200 – $300 range. Read more…