Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Oil jumps $2 as Libya crisis escalates

By Catherine Tymkiw, markets editor


NEW YORK (CNNMoney) -- Oil prices jumped more than $2 a barrel in electronic trading Sunday following escalating violence in Libya, where the military called for an immediate cease-fire after allied forces fired on Libyan defense sites.

"It seems like things have stepped up and that means more uncertainty," said Peter Beutel, an oil analyst with Cameron Hanover. "Every incident that you have expands [uncertainty]."

The benchmark U.S. contract, West Texas Intermediate, for April delivery gained $1.95 to $103.02 a barrel. The more active May contract jumped $2.08 to $103.93 a barrel.

That's still comfortably below the $106.95-a-barrel high hit two weeks ago, but Beutel said he expects volatility to rule the day.

"[Volatility] just possibly couldn't get any higher," he said, adding that he wouldn't be surprised to see prices go up by $50 and then drop $100 over the course of the year. "Volatility is getting worse and worse each day."

Meanwhile, brent crude, the main European contract, rose $1.05 to $114.98 a barrel.

While Libya is Africa's third-largest oil producer and sits atop the continent's largest reserves, the country only contributes about 2% of the 87.5 million barrels of oil the world consumes every day.

Earlier this month, the International Energy Agency estimated roughly 1 million barrels per day of Libyan oil had been taken off the world market so far.

Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have pledged to increase production to make up for any lost oil due to unrest in Libya.

But concerns are less about Libyan production and more about how far the problems will spread.

Traders are worried about growing conflict in the Middle East, following protests in Yemen, Bahrain and Oman.

"It's spreading closer and closer to the Petroleum Gulf," said Beutel, and that's what's fraying investors' nerves.

So far this month, oil prices are averaging just over $101 a barrel. In March 2010, prices averaged just over $81 a barrel for the entire month. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.41%3.40%
15 yr fixed2.69%2.68%
5/1 ARM2.83%2.86%
30 yr refi3.42%3.43%
15 yr refi2.70%2.71%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,395.40 -53.01 -0.29%
Nasdaq 5,218.92 6.71 0.13%
S&P 500 2,169.04 -3.43 -0.16%
Treasuries 1.64 0.06 3.68%
Data as of 5:35am ET
Company Price Change % Change
Bank of America Corp... 15.79 0.26 1.67%
Chesapeake Energy Co... 6.40 0.07 1.11%
Freeport-McMoRan Inc... 10.89 -0.20 -1.80%
Apple Inc 106.94 -0.63 -0.59%
Micron Technology In... 16.51 0.31 1.91%
Data as of Aug 26

Sections

On Friday Janet Yellen reiterated again that the government has to spend more during crises. Both Hillary Clinton and Donald Trump want to boost spending. More

Tesla started building its massive Gigafactory in June 2014. Since then, home prices in the nearby market have risen faster than the national average. More