Traders worry that much bigger oil suppliers in the Middle East may soon be affected Oil prices have continued to climb, hitting their highest levels in two-and-a-half years, amid fears the unrest in Libya could spread to larger oil producing nations.
Brent crude rose by more than 2% to $113 a barrel in Asian trade, while US light crude was up about 1% at $99.19.
The last time prices were this high was back in October 2008, and analysts said more gains may be on the way.
The high oil price weighed on Asian stock markets, and trading was mixed.
Japan’s Nikkei 225 index lost 0.9% while South Korea’s KOSPI shed 0.7%. Indexes in Singapore, Australia and India also declined.
Markets in Hong Kong, Shanghai and Taiwan posted modest gains.
“It’s not a very good day,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
“The market is still trending down because of high oil prices, high commodity prices because of the Middle East unrest,” added Mr Wong.
Oil prices have been rising for months, but the uprising in Libya has caused a sharp increase in crude costs.
Libya is the world’s 12th-largest exporter of oil, with the majority of its output going to Europe.
+
Supply concerns were amplified after French oil giant Total said it has started to shut down its oil operations in Libya.
Other oil companies have made similar moves in recent days.
Barclays Capital estimates that so far about 1 million barrels per day of production has been shut down.
“The futures market may be forced to price in a major loss of Libya’s output for at least a few weeks,” Ritterbusch & Associates said in a report.
The report also predicts that continuing instability in the Middle East will probably keep pushing prices up into the spring.
“This still feels like a market that is far from achieving a top,” Ritterbusch & Associates said.
The International Energy Agency and Saudi Arabia have promised to increase supplies in order to cover any shortfalls.
However, that has not eased the tensions in the oil markets.
Analysts say is oil prices keep climbing, it could push up the cost of fuel and food.
That would hit consumers in the pocket and would result in slower economic growth and weaker corporate earnings.
“It would nail the economy,” said Mark Zandi of Moody’s Analytics.
This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.