Brent crude rose over one per cent to near $114 a barrel today (Monday) as protests in Oman fuels concern about security of supply from the Middle East and North Africa even as top exporter Saudi Arabia pumps more.
Oman is the latest producer to feel the impact of the regional unrest, although its oil flow has not been affected. Revolt in Libya has cut as much as three quarters of the OPEC-member's output, prompting Saudi Arabia to step in and plug the supply gap to Libya's oil buyers.
Brent crude rose by $1.15 to $113.29 a barrel. US crude rose $1.39 at $99.27 a barrel. Both benchmarks posted their highest weekly close in two and a half years last week.
"There is the continued threat that conflicts will spread in the region that produces a large amount of oil in the world," said Ben Westmore, a commodities economist at the National Australia Bank.
"There's been a bit of a contagion already," he said.
The worst-case scenario for oil markets would be an interruption to supply from Saudi Arabia. It holds most of the world's spare crude output capacity, and without it there is no producer that could fill supply disruption such as that stemming from Libya.
The impact on oil supply would also be severe if conflict were to spread to big suppliers such as Iran and Kuwait, Westmore said.
Protestors blocked roads into the industrial area of Oman's refined product export port Sohar on Monday. Product shipments continued unhindered, a port spokeswoman said.
Oman is a small oil producer pumping around 850,000 barrels per day, but its crude forms part of benchmark pricing for more than 10 million barrels per day of crude shipped from the Middle East to Asia. Oman exports crude through the port at Mina al-Fahal.