The U.S. Energy Information Administration has said that a halt in Libya’s oil output would cause prices to soar because OPEC’s spare production capacity is limited to about 2 million barrels a day.
Unexpected outages in countries including Sudan, Syria, Yemen and Brazil have reduced output from oil producers outside of the Organization of Petroleum Exporting Countries. A stoppage of production in Libya “would probably create a spike in oil prices.
Violence in the Middle East, including a Sept. 11 attack in Libya that killed the U.S. ambassador and three colleagues contributed to oil price gains. The attacks on U.S. and other diplomatic missions in Libya, Egypt, Tunisia, Sudan and Yemen over the past few days were largely sparked by a film denigrating Islam’s prophet.
Crude for October delivery fell $2.38, or 2.4 percent, to settle at $96.62 a barrel on the New York Mercantile Exchange. The price fell to $94.65 at 2:09 p.m. from $97.32 at 2:03 p.m. on a surge in volume. The daily decline was the largest since July 23.