Oil rose from a two-week low in New York as escalating violence in Bahrain stoked concern turmoil may spill into neighboring Saudi Arabia and threaten supplies from the world’s biggest crude exporter.
Prices advanced as much as 2.1 percent as riot police cleared anti-government protesters from a central square in Bahrain’s capital. The country declared a state of emergency yesterday as Saudi-led military intervention failed to end demonstrations. Oil dropped 1 percent earlier today as Japan battled to prevent a nuclear meltdown that threatens to worsen damage to the economy from last week’s earthquake.
“As long as there is no real calming of the unrest in the Middle East I don’t see the risk premium disappearing,” said Andy Sommer, a senior analyst at EGL AG in Dietikon, Switzerland. “Spill-over into Saudi Arabia that impacts exports would be the extreme scenario, but for the time being it’s pure speculation.”
Crude for April delivery rose as much as $2.06 to $99.24 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.91 at 12:21 p.m. London time. Yesterday, prices fell to $97.18, the lowest settlement since Feb. 28.
Brent oil for April settlement was up $1.93, or 1.8 percent, at $110.45 a barrel after rising as high as $111.09 on the ICE Futures Europe exchange in London. Yesterday, the contract dropped 4.5 percent to $108.52, the biggest one-day loss since Feb. 4, 2010.
Bahrain security forces used tear gas to drive protesters from their rallying point at the central Pearl Roundabout in the capital Manama. The mostly Shiite Muslim demonstrators fled into nearby backstreets as military vehicles and helicopters were deployed in the area. The stock market suspended trading.
A state of emergency was declared yesterday as a second contingent of troops from Gulf nations poured into the kingdom. Bahrain is connected to Saudi Arabia, the world’s largest oil exporter, by a 25-mile causeway.
In Libya, forces loyal to leader Muammar Qaddafi advanced toward Benghazi yesterday after taking the gateway city of Ajdabiya yesterday. The north Africa nation’s crude exports may be halted for “many months” because of damage to facilities and international sanctions, the International Energy Agency said yesterday.
“Had it not been for the disaster in Japan, with the Saudi troops moving into Bahrain the oil price should have moved toward $120,” said Victor Shum, a senior principal at energy consultants Purvin & Gertz Inc. in Singapore. “The contagion effect on oil prices is still present.”
Japan, the third-biggest crude-consuming country after the U.S. and China, continues to suffer aftershocks after the 9.0 magnitude earthquake on March 11 shut factories and refineries. Workers at Tokyo Electric Power Co.’s Fukushima Daiichi nuclear plant were struggling to cool reactors at the plant and prevent the spread of further radiation.
The earthquake closed about 1.3 million barrels of the country’s 4.52 million barrels a day processing capacity, based on data from the Petroleum Association of Japan. JX-Nippon Oil & Energy Corp. idled refineries in Sendai and Kashima in the northeastern Tohoku region. A fire at the Sendai plant was extinguished at about 2:30 p.m. local time yesterday. The Negishi plant near Tokyo is also shuttered.
TonenGeneral Sekiyu K.K. has restarted “portions” of its 335,000 barrel-a-day Kawasaki plant near Tokyo and expects to be at full operations in a few days, it said late yesterday.
Kyokuto Petroleum Industries Ltd. is preparing to start bringing its 175,000-barrels-a-day facility in Ichihara, near the capital, back on line, said TonenGeneral, a joint venture partner in Kyokuto. Cosmo Oil Co.’s 220,000-barrel-a-day Chiba refinery remains shut.
U.S. crude oil supplies climbed 91,000 barrels last week, according to the industry-funded American Petroleum Institute. An Energy Department report today may show stockpiles rose 1.3 million barrels last week from 348.9 million, according to the median of 15 analyst estimates in a Bloomberg News survey.