Lagarde: turmoil in Middle East causing anxiety in commodities markets

PanARMENIAN.Net - French Economy Minister Christine Lagarde said Feb 25 the turmoil in the Middle East is causing anxiety in commodities markets, as Opec promised to boost output to make up for supply disruptions.

Speaking on behalf of the French G20 presidency during a visit to Indonesia, Lagarde said the sooner calm can be restored in places such as Libya and Bahrain the better.

"On the instability in north Africa and the Middle East obviously we are all appalled and horrified by what is happening, particularly in Libya," Lagarde told reporters at the end of her two-day visit. "Clearly this has an impact on the price of oil and commodities and the sooner the situation is resolved for peace and settlement of differences the better."

London oil prices rocketed close to $120 on Feb 24, a level unseen since mid-2008, as reports about Libyan supplies hit the market.

Concerns of a complete cutoff of the country's 1.6 million barrels a day of light crude drove prices upwards as Libyan leader Moamer Kadhafi appeared isolated in the capital Tripoli and some areas plunged into lawlessness.

Higher oil prices could flow into broader inflation at a time when many countries are struggling to keep a lid on food prices.

The Organization of the Petroleum Exporting Countries (OPEC) said it would increase production to make up for any losses caused by the turmoil in Libya. Saudi Arabia also reassured consumers it would boost production, according to oil specialist Platts.

Most of Libya's 1.6 million barrels a day of production has been shut down, according to various reports from oil companies and analysts. The country has the world's ninth-largest reserves, and is a member of OPEC, the cartel that produces about 40 percent of global supplies.

In London, Brent North Sea crude for April delivery reached $119.79 per barrel, the highest since August 22, 2008, before closing at $111.36, just 11 cents over the previous close. In New York the main WTI light sweet crude contract for April delivery shot up more than $5 a barrel to $103.41 before closing down 82 cents at $97.28, AFP reports.