Oil prices climb on unrest in Tunisia, Egypt, Lebanon and Yemen
Oil prices surged Friday as concerns mounted that anti-government protests in Tunisia, Egypt, Lebanon and Yemen could affect Middle East oil production. If that happens, analysts said, oil prices could quickly rise to $130 a barrel.
The protests sent crude oil futures for March delivery up $3.70, or 4.3%, to close at $89.34 a barrel on the New York Mercantile Exchange.
Analysts said traders were buying up oil in case the anti-government sentiment spreads and disrupts oil output. The buying not only reflected fears about immediate oil supplies but also whether new governments, if they ascend to power, would be friendly to the U.S. and other western countries.
“People are concerned that this could change the face of the Middle East, and no one knows what direction that might take. Will it be liberal and democratic or will it be fundamentalist and Islamic?” said Phil Flynn, an oil analyst with PFGBest Research in Chicago.
Flynn said the protests were threatening to move oil out of its most recent trading range of $85 to $95 a barrel.
Fadel Gheit, senior oil analyst for Oppenheimer & Co. in New York, said that oil prices are already inflated by at least $10 a barrel but that futures could rise to $120 to $130 a barrel if there are similar uprisings in a country such as Saudi Arabia, the world’s biggest oil producer.
“If it all ends peacefully, prices will come back down, but no one knows what will happen next,” Gheit said.
U.S. crude oil prices had been slipping. On Thursday, near-term crude futures contracts fell to $85.64 a barrel, the lowest since Nov. 30. That was a 6.8% decline from its recent peak of $91.86 on Jan. 12.
There should be no immediate effect on gasoline prices because there are ample supplies of fuel, analysts said.
In California on Friday, the average retail price of a gallon of regular gasoline was $3.361, according to the AAA Fuel Gauge Report. That was unchanged from a week earlier but up 34.2 cents from a year earlier.
Nationally, the average price was $3.100, down 1.7 cents from a week earlier but up 41 cents from a year earlier.