Libyan Troubles Push Up Global Oil Price

The price of oil reached a record high yesterday following the recent unrest in Libya. Fears about regime change and its effect on access to oil supplies in the region resulted in Brent Crude reaching prices as high as $108, with US Crude peaking at $87.37.

Libya only produces around 2% of all global oil supplies, but this is still considered enough to influence world prices, particularly as Libyan oil comprises a significant proportion of Europe’s energy market. The rapid development of instability in Libya has raised concerns about the security of other Middle Eastern oil exporters, including Iran and Saudi Arabia, which together make up a major proportion of all oil output.    

Exporting over 1 million barrels a day, Libya’s economy is highly dependent on oil revenue. The country is in control of the largest proven oil reserves in the whole of Africa. The news has impacted heavily on a number of major oil companies, with the share price of Italian firm ENI taking a 4.4% hit.

The implications of rising prices could be quite severe as it can have a knock-on effect both on fuel and also general price levels in countries which import oil. Officials representing the member countries of OPEC, which represents states with significant oil exports, will meet today to discuss the implications of Libya’s unrest on market volatility.