Oil prices soar to new heights
February 24, 2011
Oil analysts in Oslo said they were almost trembling over the “dramatic” swings in oil prices on Thursday, as the value of Norway’s North Sea crude jumped to more than USD 119 a barrel. Widespread unrest in the Middle East threatened supplies, sending prices soaring.
“This is dramatic, I’m sitting here and almost shaking,” oil analyst Torbjørn Kjus of DnB NOR Markets told Norwegian Broadcasting (NRK). He said the wild fluctuations in oil prices have never been greater than now.
A barrel of North Sea crude was trading at around USD 110 when the Oslo Stock Exchange closed on Wednesday. When it reopened on Thursday, prices were up to USD 119, the highest level for two-and-a-half years.
Analysts said it was impossible to predict how high prices could go, given all the rumours in the market. On Thursday, there were unconfirmed reports that as much as 50 percent of oil production in Libya was shut down, while traders also have feared disruptions through the Suez Canal and that widespread demonstrations like those seen in Libya, Tunisia and Egypt in recent weeks will spread to other oil producing nations, including Saudi Arabia.
“If that happens, you only have to pick a number to see how high prices will go,” Kjus said. He equated the current price shocks to those that occurred after the revolution in Iran in 1979.
Another analyst at Nordea, Bjørnar Tonhaugen, told NRK the oil market was “going completely bananas,” with prices rising two dollars in just one minute. “There’s no doubt that panic is ruling the market now,” he said.
For Norway, high oil prices mean even more petrokroner flowing into state coffers. Every dollar increase can mean another NOK 1 billion over the course of a year, but state officials have vowed to hold firm on spending limits, with most all of the windfall profits to be set aside for future generations.