Azerbaijan, Baku, Feb. 24 / Trend A.Badalova /
Oil prices may again reach record highs above $140 per barrel if hydrocarbons production stops in the major oil-producing Gulf states as a result of political unrest, Capital Economics said. However, they believe such a scenario is unlikely.
"Given the pace with which the events develop, it would be foolish to rule out the likelihood of an observance of a record level ($140 per barrel or higher) in the coming weeks in case of the disruption of supply from major oil-producing countries in the Arab Cooperation Council of the Gulf States and Iran. However, we continue to believe that such a scenario is unlikely," Capital Economics said.
Protests against the ruling regime and unrest in Libya have continued since Feb. 15. According to international organizations, the number of riot victims has exceeded 500, with roughly 4,000 people having been injured.
The riots have caused concern for several reasons. Libya is the first country-exporter to have been struck by the crisis.
Nevertheless, analysts say, there are also several reasons why one should not panic.
First, the Gaddafi regime will be replaced within a few days, perhaps even hours. Any new administration will try to renegotiate contracts with foreign oil companies, the company said.
Second, despite the fact that Libya is a member of OPEC, the country still remains a small player in the cartel. Daily oil production is 1.6 million barrels. Any oil shortage as a result of the conflict in Libya may be offset by increased production in Saudi Arabia.
And, third, the level of growth in oil prices since last summer reflects a large global demand rather than increased geopolitical risks or supply problems, the analysts said.
Libya is eighth in terms of crude oil producers among the 12 OPEC countries and third in Africa, after Nigeria and Angola. It occupies less than two percent of global oil production. The main importer of Libyan oil is Italy, followed by Germany, France and Spain.
Libyan oil imports cover 51 percent of the needs of Italy, 13 percent of the needs of Germany and five percent of the needs of France.
Following the auction on Tuesday, on Feb. 22, April futures price of Brent increased by $0.3 per barrel - up to $105.78 per barrel. The cost of the March futures on the U.S. grade of oil WTI on the New York Mercantile Exchange fell by $7.37- to $93.57 per barrel.