Gulf News reported that crude prices came tantalizingly close to the psychologically important level of USD 120 per barrel as traders succumbed to the fear that the unrest in North Africa and some parts of the Middle East would spill over into oil producing countries.

Brent crude futures for April delivery spiked to USD 119.79 before easing to USD 114.55 up almost 20% since protests first erupted in Egypt in January. Libya's violent upheaval has taken 1.2 million barrels of oil off the global market as energy plants and ports are shut down. The figure represents most of Libya's total daily production. The country sits on the biggest proven oil reserves in Africa.

Ms Caroline Bain senior commodities analyst on the Economist Intelligence Unit's Global Forecasting team said that "Yes, the price spike is driven by fear of political unrest spreading across the region and leading to severe disruptions to regional oil production. However, we had always expected oil prices to be relatively strong in the first half of this year as consumption, particularly in the developing world, is growing strongly.”

(Sourced from Gulf News)