Crude Oil Price Update. Libyan Crisis and Unrest in Bahrain the major causes of Escalated Prices.

Oil prices rallied on Monday, the 21st of March 2011 thanks to the Middle East and North Africa(MENA) Crisis. Benchmark WTI was priced at USD $ 102.33 a barrel at the time of market closure, whereas West Texas Sour, Midlands was at USD $ 98.08 a barrel.

Air strikes by Western forces in order to establish a no-fly zone over Libya intensified. There were also reports about bombings being carried out on Muammar Qadhafi’s sprawling compound in Tripoli. The chairman of Libya’s National Oil Company, Mr. Shokri Ghanem, has stated that the country’s current oil production is lower than 400,000 barrels a day. The oil market has priced in almost a complete loss in oil production, meaning that the spreading of unrest to other major oil producing countries would stretch the already limited oil supplies even more, thus leading to even more escalated prices.

The focus has somewhat shifted from Libya to Bahrain. Saudi Arabia’s decision to send troops to the kingdom in order to quell unrest from the majority Shi’ie population in Bahrain, is likely to affect demonstrations at home too. The decision has also irked Iran, a Shi’ite majority country. A confrontation between Saudi Arabia and Iran in order to spread their own influence throughout the Middle East, coupled with protests in the world’s largest oil producer, would severely affect oil supply and cause prices to increase astronomically.