Tags: US | Libya | Oil | Prices

Oil Prices Should Fall with Gadhafi Overthrow

Sunday, 21 Aug 2011 06:24 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink

NEW YORK (AP) — Oil prices around the world should start falling if Libyan rebels succeed in toppling Moammar Gadhafi's regime, though the full effect won't be felt for months.

On Sunday night, rebel forces pushed into Tripoli without meeting much resistance, hours after they overran a major military base that defended the capital. The opposition's leaders said Gadhafi's son and one-time heir apparent, Seif al-Islam, has been arrested.

Independent analyst Andrew Lipow said oil markets will likely respond Monday by sending prices lower in "a sign of relief that conflict has come to the end."

But Lipow said it will take time for the market to erase the hefty price increase that resulted from the suspension of Libyan oil exports since the rebellion began in February.

Libya used to export about 1.5 million barrels of oil per day, almost all of which have been cut off. 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.

Analysts estimate that the situation in Libya has increased oil prices by $10 to $20 a barrel.

The European refineries have struggled to make up for the production loss despite an increase from Saudi Arabia. As a result, European markets should see the first and most significant drops in oil prices, Lipow said.

He added that any developments in the ongoing European financial crisis could also move stock markets around the world this week and oil prices along with them.

Independent analyst Jim Ritterbusch said that even if rebels manage to push Gadhafi out soon, the near-term effects on oil prices will be limited.

"Psychologically anyway, it's going to force some additional selling," Ritterbusch said. "But selling may not be pronounced because there's still a lot of question marks remaining" on how long it would take for production to resume.

Michael Lynch, president of Strategic Energy & Economic Research, said that once Gadhafi is pushed out, Libya's new government could take the path of the Iraqis after the fall of Saddam Hussein and spend years fighting over every detail. Or it could follow Kuwait's example and quickly decide to bring in an outside company to get production restarted right away

He added that there's always a chance that the process could come to a halt if one of the rebel generals tries to seize power, or if different factions get caught up debating the country's new constitution and put off making decisions about oil production.

"They do have a good cadre of educated people, but they don't have a long record of competent self-government," Lynch said. "It would not be a bad bet to think there might be a chaotic period for a few months till they get organized."

___

AP Energy Writer Chris Khan contributed to this report.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

NKorea Threatens Attack on White House

Monday, 28 Jul 2014 11:09 AM

A top-ranking North Korean military official has threatened a nuclear strike on the White House and Pentagon after accus . . .

Trump: Border Crisis 'Concerted Effort' to Get Kids Into the System

Monday, 28 Jul 2014 10:51 AM

The immigration crisis at the southern border "has to be some kind of concerted effort" by President Barack Obama to get . . .

New House GOP Whip Won't Take Impeachment Off the Table

Monday, 28 Jul 2014 09:57 AM

Incoming House Majority Whip Steve Scalise, R-La., refused to take impeaching President Barack Obama off the table if Ob . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved