Alert: Oil prices up on Airstrikes in Libya image

Oil prices jumped more than $2 a barrel on Monday as the Western military action in Libya. U.N.-backed strikes led by the United States, the UK and France raised the stakes in a civil war that has cut Libya’s oil output to less than a quarter of the previous 1.6 million barrels per day.

The oil price hit $117 a barrel at one point on Friday, close to the $120-a-barrel price at which major airlines say they cannot operate profitably, and analysts said prices were likely to go even higher in coming days

An escalation in the conflict would likely send oil prices sharply higher, causing a stampede out of riskier assets, including stocks and higher-yielding currencies, such as the Australian dollar, according to WSJ

Iran’s oil minister Massoud Mirkazemi told Reuters that any output increase by individual OPEC members aimed at reducing oil price pressures caused by the Libyan crisis would not have the desired effect.

Paul Watters, a spokesman for the AA, said: “Libya has shaken the market and will probably continue to push the oil price up, but it is a volatile market.

“Some of the increases will already be priced into the market and if it was more stable in Libya, then future prices would be lower.”

In U.S. the current average price is nearly 76 cents above the year-ago level, but is still about 54 cents below the all-time high of $4.1124 on July 11, 2008.

photo credit: sjrankin