Oil prices crossed at two-year high on Monday, the 7th of March 2011, following the worsening of the conflict in Libya between the rebels and Muammar Qadhafi. One of Mr. Qadhafi’s sons, Saadi,
declared that the embattled leader has not deployed the army in full force against the rebels, saying it to shield Libya against a possible attack from foreign forces. The unrest brewing in Saudi Arabia was causing greater jitters amongst investors in the market, with protests organized on Friday later that week in the world’s biggest oil producing country against the monarchy. Investors were scared that upheavals in Saudi Arabia could severely disrupt oil supplies, leading to escalated prices. Brent closed at USD $ 115.5 a barrel, while WTI Sour, Midlands closed at USD $ 101.84 a barrel.
However, prices eased on Tuesday, the 8th of March 2011, following reports that OPEC was considering raising production in order to ensure that oil supplies did not run low on account of the loss in supply from Libya. Investors’ confidence was further boosted by an announcement from the Saudi Arabian Oil Minister,Ali Naimi, who said that the kingdom was developing a “special mix” of oil, resembling the sweet, light crude extracted from Libyan oilfields which is in great demand in Europe. Brent closed at USD $ 112.41 a barrel, while WTI Sour, Midlands closed at USD $ 101.37 a barrel. However, investors were prevented from aggressively buying oil thanks to lingering uncertainty about the situation in Saudi Arabia.
Prices were mixed on Wednesday, the 9th of March 2011. Brent closed at USD $ 114.93 a barrel, slightly above Tuesday’s price of USD $ 112.41 a barrel, while WTI Sour, Midlands fell from its price of Tuesday to USD $ 100.73 a barrel. The decrease in North American oil was because of data released by industry insiders showing that US crude oil stocks at Crushing, Oklahoma had increased. This helped in easing fears about oil shortage in the market.
The increase in Brent’s price was due to uncertainty about the oil supply in the international market. Even though Saudi Arabia was insisting that OPEC had increased its production by more than 2.5 million barrels per day, the cartel declared that it did not see any need to hold an emergency meeting to raise its total production quota. There was no way to confirm Saudi Arabia’s claims, and speculation about oil supplies was making the market uncertain, more than the actual oil supply in the market.
Oil prices headed for their first weekly loss on Thursday, the 10th of March 2011. Brent closed at USD $ 113.46 a barrel, while WTI was at USD $ 102.70 a barrel. A slew of weak economic news led to an overall fall in demand of oil, which led to this decline in oil prices.
Following the devastating 9.0 earthquake and its subsequent tsunami in Japan, oil prices fell on Friday, the 11th of March 2011. Japan is the third largest oil consumer in the world. The earthquake led to the shutting down of refineries and factories throughout the Land of the Rising Sun, which resulted in a massive decline in oil demand.
Furthermore, OPEC stated that its actual production in February 2011 had increased by 110,000 barrels a day. Moreover, there were only tame protests in Saudi Arabia in response to the so-called “Day of Rage” Protests against the kingdom. Both of these factors eased fears about imminent oil supply bottlenecks and helped in bringing oil prices down. Brent closed at USD $ 113.38 a barrel, while WTI closed at USD $ 101.16 a barrel.