Oil hit two-year highs in Asian trade yesterday as turmoil continued to wrack the Middle East and threatened to spread to other bigger oil producers in the region, analysts said.
New York’s main contract, light sweet crude for April delivery, rose US$0.93 to US$98.93 per barrel after passing the US$100 mark for the first time since October 2008 on Wednesday.
Brent North Sea crude for April was up US$1.41 at US$112.66.
Fears of unrest spreading from embattled Libya were pushing crude prices up, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
“The concerns go beyond Libya, which is a relatively small oil producer, to the bigger oil producers that may be affected if the revolt spread,” he said.
Libyan leader Muammar Qaddafi’s pledge on Wednesday to crush anti-regime protesters added fuel to the fire, Shum said.
Libya has Africa’s largest oil reserves, is the continent’s fourth-largest producer and is a member of OPEC, the cartel that produces about 40 percent of global supplies.
“The world could probably live with US$100 oil as consumers and businesses are now used to it,” said Shane Oliver, chief economist at AMP Capital Investors.
However, a continued surge in oil prices, especially if unrest in the Middle East spreads, “could start to be more of a dampener on growth,” he said.
Yesterday, Vietnam raised fuel prices by up to 24 percent, adding to soaring inflation and causing gridlock in Hanoi as motorists scrambled to fill their tanks before the increase took effect.
The increase takes fuel prices to record levels and follows a decision earlier this week to raise electricity rates.
Vietnam has been grappling with high inflation as food costs jump. The consumer price index rose 12.2 percent from a year earlier last month.
The gasoline price was increased 17.5 percent to 19,300 dong (US$0.92) per liter and the diesel price by 24 percent to 18,300 dong per liter.
Economists warn the fuel price increases and a 15 percent increase in electricity prices that will take effect on Tuesday will lower living standards and undermine the government’s attempts to curb double-digit inflation.