Oil prices headed for a third straight weekly gain on Thursday, the 7th of April 2011, as unrest in the Middle East was the major factor driving supply fears and oil prices upwards. Brent Crude Future rose by 0.58 percent to register at USD $ 123.380 a barrel, while WTI future was trading at USD $ 111.180 a barrel, increasing by 0.80 percent.
Fighting in Libya between Muammar Qadhafi’s forces and Western backed rebels has reached a stalemate, with neither side being able to gain a definite upper hand against the other. Oil production from Libya has been reduced to a mere300,000 barrels a day, all of which is being used by the domestic refineries for domestic consumption. Furthermore, a fire broke out at the Sarir oilfield, which is located in the Sirte Basin, from where two-thirds of Libyan oil production comes from. The International Monetary Fund (IMF) has voiced concerns that with production from Libya being hampered for the foreseeable months, rising global oil demand will cause oil prices to rise even further. In the light of the Libyan crisis, efforts to add new oil supply sources have not been fruitful, since the atmosphere of political uncertainty and dissent against the ruling class in the Middle East is forcing oil companies to rethink their investment strategies in the region. A Reuters survey of 32 major oil traders has predicted that oil prices will go above USD $ 130 a barrel by late 2011.