Price for Crude Oil Falls After Rebels' Success in Tripoli 22/08/2011 11:49:00
The Libyan rebels' success in Tripoli Sunday when they captured most of the country's capital, Tripoli, affected the price of crude oil, boosting hopes that the OPEC nation's oil exports could resume soon. As a result of the insurgents' gains in the country, Brent crude fell to near $105 a barrel Monday.
In London, Brent crude for October delivery was down $3.22 per barrel to $105.40 on the ICE Futures exchange, AP reported.
Benchmark oil for September delivery was down 25 cents to $82.01 a barrel at late afternoon in electronic trading on the New York Mercantile Exchange, with crude falling 12 cents to settle at $82.26 on Friday.
Benchmark crude rose from $84 in February to near $115 in May as the uprising shut down Libya's oil exports of 1.5 million barrels a day. Although Libyan oil amounted to less than 2 percent of world demand, its loss affected prices because of its high quality and suitability for European refineries.
Investor fears in recent weeks that slowing economic growth in the U.S. and Europe will undermine demand for crude pushed prices back down.
Libyan oil mostly supplied Europe, and analysts expect the return of Libya crude output would impact Brent prices more than the U.S. benchmark West Texas Intermediate, or WTI.
An analyst with energy consultant Purvin & Gertz in Singapore, Victor Shum, said that, "If the Al Qathafi regime falls, Libyan oil production should gradually resume and European markets would directly benefit from that.”
Shum added: "Having more supply while the global economy is under threat should put downward pressure on oil prices."
One now needs to study very closely how smooth the transition to the new government in Libya will be and how fast oil production can come back on line, with some of Libya's oil infrastructure reportedly having been damaged during the months of fighting.
UK to Assist Rebels by Unfreezing Libyan's Funds While urging long-time Libyan leader Muammar Al Qathafi to step down, world leaders have further boosted the rebels' moral by even promising material support, with British prime minister David Cameron among the first to say that Libyan assets frozen during Al Qathafi's reign would soon be released to aid the rebels establish order in the country.