Following the announcement of an immediate ceasefire by the Libyan government against the rebels in the country, oil prices fell on Friday, the 18th of March 2011. Brent oil dived immediately by USD $ 3, minutes after news about the ceasefire broke out. Brent crude for May delivery settled at USD $ 114.15 per barrel. The spot price of Brent closed at USD $ 113.92 per barrel, WTI closed at USD $ 101.07 per barrel, while West Texas Sour, Midlands closed at USD $ 96.82 per barrel.
The announcement of a ceasefire was meant with caution by the rest of the world, since it had been announced after the UN had passed a resolution calling for the imposition of a no-fly zone over Libya, in order to help the rebel fighters against Muammar Qadhafi’s forces. Many analysts believed that the announcement might be a strategic move by Qadhafi to position his troops in a better position and then launch a final attack on the rebel stronghold of Benghazi. A deteriorating situation in Libya is bullish on the oil market. If the crisis in Libya does not get sorted out quickly, then, the market might witness an upsurge in oil prices.
The situation in Japan after getting struck by an earthquake and tsunami is another major factor which will affect oil prices in the coming weeks. If the Japanese authorities are able to prevent the nuclear reactors at the Fugushima Nuclear Plant from spiraling into total meltdown, then, the demand of oil from Japan for its reconstruction activities as well as to fill in the lack of electricity production from its nuclear plants will cause oil prices to rise. If Japan does suffer a nuclear crisis, then, the market prices are expected to remain low for a considerable amount of time.