NEW YORK – With Libya still in chaos and little information available about the status of its oil fields and ports, oil prices rose on Friday and finished about 13 percent higher for the past week.
The surge in oil, which peaked at $103.41 per barrel for benchmark crude on Thursday, hit drivers across the U.S., where gas pump prices are already the highest ever for this time of year. A gallon of regular shot up 11.6 cents in the past three days to a national average of $3.29, according to AAA, Wright Express and Oil Price Information Service. That includes a spike of nearly 6 cents on Friday, the largest one-day increase since Sept. 14, 2008.
"Everyone's a nervous wreck," PFGBest analyst Phil Flynn said. "What we're seeing is perhaps the greatest threat to global oil supply since the Persian Gulf War."
Oil for April delivery wavered in a volatile trading day on Friday before settling 60 cents higher at $97.88 per barrel on the New York Mercantile Exchange.
The Libyan rebellion has all but shut down exports from there, and traders say it's hard to gauge how much world supplies — and prices — will be affected as similar uprisings unfold in North Africa and the Middle East. Analyst Stephen Schork said that traders have already priced in a "fear premium" of about $15 to $20 per barrel, but that premium could grow as long as fighting continues.
"We just have a whole bunch of unknowns" when it comes to the region, Schork said. "Every time you turn on the television, all you see are riots. It's a very difficult market to predict."
The International Energy Agency and Saudi Arabia have both tried to soothe energy markets in recent days, promising to tap into spare supplies and make up for any sustained production losses out of Libya. Libya produces about 1.6 million barrels per day, less than 2 percent of world consumption. It exports much of that oil to Europe.
The IEA member nations have about 1.6 billion barrels in reserves. The Saudis produce about 8.5 million barrels per day and could ramp that up to 12 million or more.
While the IEA says its reserves amount to a 145-day supply for its members, analysts are not sure how long spare supplies would last if protests disrupt oil production in other countries. They're keeping a close eye on pro-reform rallies in countries like Algeria, which produces about 1.4 million barrels per day, and Bahrain, which has no oil of its own but is next door to Saudi Arabia.
Some U.S. lawmakers have suggested that President Obama could cool off oil markets by opening the country's Strategic Petroleum Reserve. Energy economists question whether that would do any good. The U.S. imports very little from Libya and already sits on supplies that are well above average for this time of year.
European leaders say their oil supplies are currently not in danger, and they are in contact with OPEC officials while preparing for a sustained shutdown in Libyan crude.
Italy's economic minister said he didn't expect any supply problems and his country could supplement its supplies through spot oil markets. One of the largest oil refiners in the country, Saras, said it is looking for alternatives from Algeria, Azerbaijan, West Africa and the North Sea.
Spain said it will lower highway speed limits, cut train ticket prices to get more riders on board and use more biofuel to offset any petroleum shortages from Libya.
A spokesman for the International Monetary Fund in Washington said the agency doesn't expect oil prices to keep climbing.
Despite the reassurances, markets remained on edge Friday. Prices dropped shortly after the U.S. reported the nation's economy grew more slowly at the end of 2010 than previously thought. They jumped again on reports that a magnitude-5.7 earthquake hit Mexico's Gulf coast near its offshore oil platforms. A government spokeswoman said oil production was not affected.
In other Nymex trading for March contracts, heating oil added 5.23 cents to settle at $2.9455 per gallon and gasoline futures gained 3.37 cents to settle at $2.9086 per gallon. Natural gas for April delivery picked up 13.3 cents to settle at $4.005 per 1,000 cubic feet.
In London, Brent crude rose 78 cents to settle at $112.14 per barrel on the ICE Futures exchange.