SAUDI Arabia yesterday said it would step in to meet shortage in oil caused by the chaos in Libya.
Saudi Arabian oil minister Ali al-Naimi said there would be no shortage and that other Opec members would step into the breach should production be jeopardised.
Speaking at the sidelines of an oil conference in Riyadh, al-Naimi also said that oil supply and demand were equal and that there was no shortage of supply.
Libya is the third-largest oil producer in Africa, and has Africa’s largest proven oil reserves at 44bn barrels.
However, Libya produces around 1.6m barrels of oil per day, and OPEC has spare capacity of up to 6m barrels, meaning that in theory even if all exports were stopped this would not create a supply shortage.
However, the fear is the contagion could spread to places like Algeria, Kuwait or the United Arab Emirates.
Analysts and investors are also increasingly concerned that tensions in Bahrain could spill over the border into Saudi Arabia.
Shell yesterday continued the evacuation by oil firms of non-essential staff, while German company Wintershall has wound down production completely as a precautionary measure.
Iran has also stopped its oil-related activities in Libya and will evacuate staff in the next 48 hours.
Brent futures rose again yesterday and US crude oil reached a two and a half year high on concerns the revolt in Libya could spread to other major oil producers as companies suspended operations and ports were disrupted.
US crude for April delivery was up $5.71 at $95.47. Brent crude oil futures for April delivery were up 75 cents to $106.46, after earlier touching $108.57, near Monday’s high of $108.70.