A halt in Libya’s oil output would probably cause prices to soar because OPEC’s spare production capacity is limited to about 2 million barrels a day, the head of the U.S. Energy Information Administration said.
Unexpected outages in countries including Sudan, Syria, Yemen and Brazil have reduced output from oil producers outside of the Organization of Petroleum Exporting Countries, EIA head Adam Sieminski said at a conference in Rio de Janeiro today.
A stoppage of production in Libya “would probably create a spike in oil prices,” Sieminski said.
Violence in the Middle East, including a Sept. 11 attack in Libya that killed the U.S. ambassador and three colleagues contributed to oil price gains last week. The attacks on U.S. and other diplomatic missions in Libya, Egypt, Tunisia, Sudan and Yemen over the past few days were largely sparked by a film denigrating Islam’s prophet.
Oil declined the most in eight weeks after dropping $2.67 a barrel in 6 minutes during the last 30 minutes of floor trading.
Crude for October delivery fell $2.38, or 2.4 percent, to settle at $96.62 a barrel on the New York Mercantile Exchange. The price fell to $94.65 at 2:09 p.m. from $97.32 at 2:03 p.m. on a surge in volume. The daily decline was the largest since July 23.