Conflict & Justice

Oil price spikes on fears for prolonged Libyan crisis

Crude oil prices rose in Asia on Tuesday as hopes for a swift rebel victory in Libya faded.

Gunfire crackled around Tripoli despite rebel claims to have captured Muammar Gaddafi's stronghold in a lightning advance on Sunday.

Brent North Sea crude for October delivery rose 58 cents to $108.94 a barrel in Singapore, from Monday's close of $108.36, according to AFP.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for October delivery rose 97 cents to $85.39.

Prices rose on expectations it could still take years before Libya's oil output returns to normal.

"Until it reaches a conclusion one way or the other, you are going to see volatility in prices," said Shailaja Nair of energy news specialist Platts' Asia desk in Singapore.

John Vautrain of energy consulting firm Purvin & Gertz told Reuters it "could take months" for oil to start flowing out of Libya, which has been in violent turmoil since February.

"I think there was a lot of euphoria on Monday. But the whole country is not completely pacified yet and we don't have an organized government. A lot is lacking," he said.

(Earlier on GlobalPost: Italian oil company leads charge back into Libya)

Uncertainty over how the north African country will be run under any new government, with the prospect of tribal feuds over oil wealth, added to the sense of wariness, analysts said.

Exiled former Libyan oil minister Shukri Ghanem told Platts on Monday that it could take two years before production returns to pre-crisis levels, AFP reported.

Libya produced about 1.6 million barrels a day before the revolt erupted against Gaddafi's rule. About 1.3 million barrels of that were exported, much of it highly valued light crude.