MT:World oil prices should fall with toppling of Gadhafi’s regime
NEW YORK—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. Opposition fighters captured Gadhafi’s son and one-time heir apparent, Seif al-Islam.
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.
Brent crude for October delivery was down $3.22 per barrel to $105.40 on London’s ICE Futures exchange. Benchmark oil for September delivery was down 25 cents to $82.01 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 12 cents to settle at $82.26 on Friday.
When fighting broke out, oil was trading at around $84 a barrel. It quickly spiked above $93 and kept rising to a high above $110 at the end of April. Demand from emerging markets including China was also a factor in the rise. Oil has fallen recently along with stocks because of concerns about the global economy.
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. AP
