Crude futures sky-rocketed Tuesday as concern grew that the revolt may spread to other oil-producing countries in the Middle East and North Africa. Prices gained $2.66 Tuesday, settling at $99.63 a barrel—the highest since Sept. 2008.
Oil surged on fear that the violence may spread to wealthier neighboring countries in the Middle East, such as Iran. After Saudi Arabia, Iran is the second-largest producer in the Organization of Petroleum Exporting Countries (OPEC). Meanwhile, Saudi Arabia's stock market plunged by 6.8% Tuesday due to the heightened violence in Bahrain, which neighbors the leading OPEC producer.
Additionally, Saudi Arabia has increased its production output by 500,000 barrels to nine millions barrel a day, in an effort to ease the loss of Libyan supplies.
Crude for April delivery peaked at $100.68 and bottomed out at $96.37 a barrel Tuesday.
Likewise, gasoline futures also increased Tuesday. Reformulated gasoline blendstock soared to prices last seen in Aug. 2008. Traders fear that if the political turmoil spreads to Saudi Arabia and Iran, there may be a disruption in supplies for refiners. Gasoline futures rose 9.07 cents, settling at $2.98 a gallon. Gasoline prices fluctuated between $3.86 and $4.06 Tuesday.
The protests in Libya have forced oil companies to evacuate workers and shut down production operations, forcing refineries to turn to other countries for oil. According to analysts, the replacement barrels may not be as sufficient due to the fact that Libyan oil is light and low sulfur and therefore, the best the best oil for refining.
Meanwhile, front-month natural gas fell 16.4 cents, settling at $3.87 per thousand cubic feet. The intraday range for natural gas was $2.89 to $3.01.
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