Brent crude oil pushed back above $115 a barrel on Tuesday as supply disruptions and the potential for more as unrest spreads in the Middle East and North Africa had investors on edge. US crude rose more than 2 percent and pushed above $99 a barrel as a Reuters report that human rights activists said Saudi authorities had detained a Shia cleric fuelled fears of sectarian conflict in the world's top oil exporter.
Clashes between opposition supporters and Iran's security forces in Tehran reported by an opposition website added to investor concerns about unrest and the flow of oil supplies in the region. "The Saudis had seemed to be walking the tightrope and avoiding problems, but the cleric story had people worried that it signalled problems there," said Robert Yawger, senior vice president, energy futures at MF Global in New York.
Brent crude futures for April rose $3.59 to $115.39 a barrel by 2:44 p.m. EST (1944 GMT). US crude rose $2.66 to settle at $99.63 a barrel, the highest close since front-month crude ended at $100.64 on Sept. 30, 2008. Brent's premium to its US counterpart was above $15 a barrel, up more than 80 cents intraday, after last week's record $16.91. Brent's price rise has been stronger because Europe is more vulnerable to supply disruptions from Libya and the region.
As the region continued to see protests and clashes, a report in an Egyptian newspaper that Saudi Arabia had sent tanks to Bahrain to try to quell protests there roiled markets briefly, prompting a Saudi defence ministry official to issue a denial. Muammar Gaddafi remained defiant against opposition and the United States said Libya faced the danger of civil war if the leader refused to quit, a demand for his departure carrying fresh weight after news of Western military preparations.
Libya's National Oil Corporation chairman, Shokri Ghanem, said its oil installations were undamaged, although output was halved because of departures by oil workers. OPEC output fell 200,000 barrels per day in February from a two-year high the previous month as the uprising in Libya curbed supplies and offset Saudi Arabia's increased output, a Reuters survey found.
"We're now at the point where a $1-$2 move is just a normal fluctuation," said Peter Beutel, president at Cameron Hanover in New Canaan, Connecticut. "At this point, we're rife with rumours and when any emerge from the 'Petroleum Gulf' we're going to see a jump. If there's some truth in it, the move will be $5-$6 rather than $1-$2."