World

Oil Jumps 5%, Gold Peaks Over $1,400 on News of Libyan Unrest

LONDON (The Blaze/AP) — Fears that Libya is heading toward deepening chaos hit stocks Monday and pushed oil prices sharply higher.

With reports suggesting that over 200 people have been killed in clashes across the country, which have spread to the capital Tripoli, investors are getting increasingly worried about the escalating violence in one of Africa’s biggest oil producers.

Those concerns were heightened by a statement from Seif al-Islam Gadhafi, the son of Libya’s longtime leader Moammar Gadhafi. Blaming everyone from drug addicts to the media for the current turmoil afflicting Libya, he warned that civil war was a real possibility and that his father would fight until “the last bullet.”

Unlike Tunisia and Egypt, which have already seen popular uprisings that deposed longtime leaders, Libya is a member of producer cartel OPEC and has a direct impact on global oil production.

The country is one of the world’s biggest oil producers, accounting for around 2 percent of global daily output, and has the biggest proven oil reserves in Africa. Already three leading oil companies, Italy’s ENI, Norway‘s Statoil and Britain’s BP, have already said they are pulling some employees out of Libya or preparing to do so.

“Libya is the first major oil exporter to be engulfed by the crisis and the first to see significant disruption to oil production,” said Julian Jessop, chief international economist at Capital Economics.

Unsurprisingly, the main impact was in the oil markets. Benchmark crude for March delivery was up $4.13, or 4.8 percent, at $90.13 a barrel in electronic trading on the New York Mercantile Exchange, while Brent crude in London spiked $2.35 a barrel, or 2.3 percent, to $104.84, having earlier struck a two and a half year high above $105.

Rising oil prices are a particular worry for investors as they reinforce fears over inflation and raw materials costs. They also stoke fears of a big drop in global demand levels, as evidenced in previous oil price shocks in 1973-4, 1979 and 2008.

Given that unappetizing backdrop, investors’ appetite for risk in other markets fell sharply. When risk appetite is low, investors usually look for shelter in the perceived safe havens of the U.S. dollar and gold at the expense of more risky investments such as stocks.

“All three commodities are ripping face today,” Business Insider writes. “Crude is zooming back towards $90, gold has broken back above $1400 to $1404, and silver — silver! — is closing in on $34. Just last night it broke $33.”

“Political risk is hanging over a big proportion of the world’s oil supplies,” said Simon Derrick, an analyst at Bank of New York Mellon. “I can see safe haven buying the natural outcome of all this.”

In Europe, Germany’s DAX index closed down 105 points, or 1.4 percent, at 7,321.81 while the CAC-40 in Paris fell 59.73 points, or 1.4 percent, to 4,097.41. The FTSE 100 index of leading British shares ended 68.19 points, or 1.1 percent, at 6,014.80.

Markets in the U.S. will be closed Monday for the President’s Day holiday.

In the currency markets, the euro fell 0.1 percent to $1.3671, while the dollar was unchanged at 83.17 yen. Among commodities, an ounce of gold spiked over $17 to $1,406.

The unrest in Libya dominated European markets and deflected attention from positive economic data and a heavy defeat for German Chancellor Angela Merkel’s party at a state election.

Particularly strong was a survey showing that business confidence in Germany, Europe’s biggest economy, has risen once again to hit a new two-decade high. The Ifo institute said its confidence index – a closely watched indicator – was up to 111.2 points for February from 110.3 in January. It was the ninth consecutive month-on-month rise.

Despite a buoyant German economy, Merkel’s Christian Democrats lost badly in Hamburg.

Lee Hardman, a currency economist at the Bank of Tokyo Mitsubishi-UFJ said the defeat could prove to be a significant development should it set a precedent going forward. The next two upcoming state elections are on March 27, two days before a crucial summit of EU leaders.

“Should the CDU party continue to lose national support ahead it could damage its ability to deal effectively with the eurozone debt crisis,” Hardman said.

Earlier in Asia, investors also had their first chance to respond to Friday’s decision by the monetary authorities in China to increase the amount banks hold in reserve. The 0.5 percent increase was announced after Asian markets had closed.

Mainland Chinese shares shrugged off the central bank’s move. The benchmark Shanghai Composite Index gained 1.1 percent to 2,932.25. The Shenzhen Composite Index gained 1.9 percent to 1,297.66.

Elsewhere, Japan’s Nikkei 225 stock average rose 0.1 percent to 10,857.53 with the index enjoying a six-day winning streak to close at a 10-month high.

Hong Kong’s Hang Seng index lost 0.4 percent to 23,508.62, while South Korea’s Kospi fell 0.4 percent to 2,005.30 and Australia’s S&P/ASX 200 shed 0.7 percent to 4,900.

—

Pamela Sampson in Bangkok contributed to this report.

Comments (56)

1 2
  • tomloy
    Posted on February 21, 2011 at 6:16pm

    I am glad I own a civic hybrid!

    Report Post »  
  • Vunks
    Posted on February 21, 2011 at 6:09pm

    Once again Ron Paul was right.

    Time for the Economic collapse!

    Report Post »  
  • obama_binpharteen
    Posted on February 21, 2011 at 6:04pm

    Gas is already up just over $4.00 here in the Bay Area, and that was yesterday.
    I can’t wait to see what they are today,.

    Report Post » obama_binpharteen  
  • donh2
    Posted on February 21, 2011 at 6:04pm

    Gold just arrived at $1400 today. How dare anyone say this price is a “peak” when it has every opportunity to run up to $1500 .

    Report Post »  
  • rabblechat
    Posted on February 21, 2011 at 5:25pm

    MIGUELITO
    Posted on February 21, 2011 at 2:57pm
    Drill baby drill! I have not heard a good excuse why the USA can not drill here now!

    Thats great and I am all for it but the fact of the matter is, even if we got rid of all the restrictions and let anyone with a auger and an empty bucket drill for oil, we would not be able to produce enough to meet our needs. Our all time production high occurred in 1970 at a little under 10million BPD we currently produce about 5M BPD .We consume well over 20 million barrels a day!
    Given those facts I see no way we can ever give up foreign oil.
    Alternative energy is a joke. Nothing foreseeable will replace oil. You may get a small car to run 30 or 40 miles on electric, but what are the chances we will see a 100% electric 18 wheeler? how about an Electric jet? Fat chance…
    http://www.rabblechat.com

    Report Post » rabblechat  
  • redrotor
    Posted on February 21, 2011 at 5:18pm

    Gosh, I wonder if we should invest more in alternative energy sources that are plentiful, not owned and held hostage by other nations and interests, and do not cause sociopolitical strife? Nah, that would be stoopid.

    Report Post »  
  • MistaB
    Posted on February 21, 2011 at 4:57pm

    The oil spilled into the Gulf of Mexico was screaming at us to come and get it and what did we do? We gave $2 Billion to Brazil for their oil exploration and $2 Billion to Mexico for theirs. Amazing logic.

    Report Post »  
  • docgreen
    Posted on February 21, 2011 at 3:31pm

    Its a good thing we didn’t use our reserves, when the Dems wanted us to when Bush was in office! We’d be Scr_wed if we had, and gas would be at 10.00 a gallon! Also, watch Iran, because if they close down the Suez Canal! Also, anyone notice the 5.9 EarthQuake that just happened? Anyone that doesn’t think this is Biblical is Crazy!

    Report Post »  
    • docgreen
      Posted on February 21, 2011 at 3:33pm

      If Iran closes the Suez Oil is going to go through the Roof! They have allready said what their intent was a few years back! They wanted to close it down by sinking a ship and or ships in it! Hmmmm.

      Report Post »  
  • CaptainSpaulding
    Posted on February 21, 2011 at 3:11pm

    Oh yeah?

    Well we’ll raise gas taxes and cut domestic supply.

    That’ll show the high oil price. :)

    /sarc

    Report Post »  
  • agro21
    Posted on February 21, 2011 at 2:35pm

    When gas prices hit $3/gallon during the Bush admin–he was crucified for being an oil man, Haliburton buddy, while the big oil execs were hauled into congressional hearings. Now Obama is in charge and all I hear are the sounds of silence coming from the media.

    Report Post »  
    • docgreen
      Posted on February 21, 2011 at 7:01pm

      I remember the Dems sayign to open up our reserves; think about how screwed we be if that happened!….. I believe we keep about three and a half months worth of it. RESERVED! I have a feeling, this is going to get way out of control! Doesn’t the Bible state were not supposed to put our faith in gold and silver? What I’m saying is preapare, but don’t put all your faith in the Gold and Silver part!

      Report Post »  
  • mrsmileyface
    Posted on February 21, 2011 at 2:14pm

    Hell if any of the OPEC leaders farts the price goes up.

    Report Post » mrsmileyface  
  • eflow504
    Posted on February 21, 2011 at 1:31pm

    after 2012 we will start being a real country again.. buy silver its the way to go.. silver is on the up and up

    Report Post »  
  • banjarmon
    Posted on February 21, 2011 at 1:19pm

    I would like to find a Stupid person to sell my gold to if I had any!

    Report Post » banjarmon  
    • Steverino
      Posted on February 21, 2011 at 1:28pm

      BANJARMAN-
      Yeah, hey I’ll… wait. You don’t, uh. Hmmm… have any.
      Hmmmm…
      I’m confused, but I AM stupid.
      Steve

      Report Post »  
  • Uncurable wound
    Posted on February 21, 2011 at 1:04pm

    2011 is going to be ?

    Report Post »  
  • Just_Bubba
    Posted on February 21, 2011 at 12:56pm

    Beans, bullets and bandaids. Oh and M&Ms too.

    Report Post » Just_Bubba  
  • flamegonesilver
    Posted on February 21, 2011 at 12:55pm

    Oh Mr. President….when are you going to lift your ban on drilling here in America, so we don’t have to be slaves to those who wish us dead?

    Report Post »  
  • Getten
    Posted on February 21, 2011 at 12:51pm

    Listen Everyday – http://www.infowars.com/audiobox.html

    Report Post » Getten  
  • rightwingheroes
    Posted on February 21, 2011 at 12:38pm

    Hope and Change category? I just paid $3.41 per gallon in NY which is well higher than the average.

    Report Post »  
  • Rearden Steel
    Posted on February 21, 2011 at 12:22pm

    Well if they hadn’t run Ellis Wyatt out of Colorado…

    Report Post »  
  • Insipid
    Posted on February 21, 2011 at 12:22pm

    Silver is my thing, I just cracked the 100 lb mark this weekend. Proud to say my first 80 lbs were purchased at <5.50 oz. I wish I had diversified into gold as well but %wise silver has been better since 2003. Water, food "including seeds", silver, ammo, gold and several survival kits/books. Hope to have 2 portable 1500 watt solar arrays in 30 days and and I hope to be good to go..

    Report Post » Inbred Jed  
  • poverty.sucks
    Posted on February 21, 2011 at 12:21pm

    And the White House is concerned about Sugar and Salt consumption?

    Report Post » poverty.sucks  
  • LadyIzShy
    Posted on February 21, 2011 at 12:20pm

    thats the jump? heck I expected far worse. I think the Gov is in on coltroling prices of ALL goods

    Report Post » LadyIzShy  
    • GhostOfJefferson
      Posted on February 21, 2011 at 12:46pm

      In one day?

      Government can’t control getting the mail delivered on time, they’re not competent to control the entire commodities market.

      Report Post » GhostOfJefferson  
  • Showtime
    Posted on February 21, 2011 at 12:15pm

    People who seek to control are out of control.

    I learned that MANY years ago!

    Report Post » Showtime  
    • Snowleopard {gallery of cat folks}
      Posted on February 21, 2011 at 12:32pm

      I learned that from a dominering mother and a crazy sister.

      Report Post » Snowleopard {gallery of cat folks}  
    • jinx83
      Posted on February 21, 2011 at 11:44pm

      Pray for this Nation to have the strength to over come this evil. because unfortunately you’re both right.. it’s going to be a slow wake up for some…

      Report Post »  
  • EqualJustice
    Posted on February 21, 2011 at 12:14pm

    And I went and listened to all those Conseravatives telling me to BUY Gold. How silly of me! :) :) :)

    Report Post » EqualJustice  
    • BMMiller1975
      Posted on February 21, 2011 at 8:03pm

      Gold won’t stay safe forever. IMHO, it’s a bubble waiting to be popped.

      Report Post »  
  • Showtime
    Posted on February 21, 2011 at 12:14pm

    Just 5 percent?
    The price of everything else has risen more than that.

    Report Post » Showtime  
    • cnsrvtvj
      Posted on February 21, 2011 at 12:19pm

      I think this is just the start Showtime. Remember the outrage from the left when George Bush was President and gas prices went over $3 a gallon? The national average has been over $3 gallon fro several months now. Where is the outrage? It was at less than $2 gallon when Obama took office.

      http://www.donsmithshow.com – see the selective outrage video

      Report Post » cnsrvtvj  
    • Snowleopard {gallery of cat folks}
      Posted on February 21, 2011 at 12:22pm

      It looks like a time of true chaos is now at hand; I just hope and pray that most people of this country are ready as possible for the next waves of the storm coming in our direction. I also expect for the administration to use the chaos for more of their agenda pushing in the near future. Imagine what they, the administration, can get away with if there came another fuel shortages or oil disruption or embargo as in the 70s ( I think hat is when it happened).

      Report Post » Snowleopard {gallery of cat folks}  
    • Snowleopard {gallery of cat folks}
      Posted on February 21, 2011 at 12:24pm

      @CnsrvtJ

      Yes this is just the beginning; and I have to wonder now where the next sledgehammer series of blows is going to be directed at, and where they shall land. There has been a call for a rebellion against the president of the Ivory Coast over the weekend if I heard it on the radio correctly.

      Report Post » Snowleopard {gallery of cat folks}  
    • Steverino
      Posted on February 21, 2011 at 12:25pm

      These are the times I wish I had a 32,000 gallon storage unit buried in my backyard.
      The city wouldn’t allow it for some reason.
      What a bunch of busybodies!
      Steve
      http://stephencharles-poppin-off.blogspot.com/

      Report Post »  
    • GhostOfJefferson
      Posted on February 21, 2011 at 12:45pm

      In one day though?

      Report Post » GhostOfJefferson  
    • My Two Cents
      Posted on February 21, 2011 at 12:51pm

      The tip of the proverbial iceberg.

      Report Post »  
    • ISeeDanger.com
      Posted on February 21, 2011 at 1:17pm

      I’ve said it again and again and again…. I See Danger.
      Most have no clue what is coming.

      Report Post » ISeeDanger.com  
    • Miguelito
      Posted on February 21, 2011 at 2:57pm

      Drill baby drill! I have not heard a good excuse why the USA can not drill here now!

      Report Post »  
    • docgreen
      Posted on February 21, 2011 at 3:26pm

      Hey all, this is just the start! It takes a bit for the trickle down effect. This is only going to get worse, and the big question is who bennefits from it? Obama and the Elites of the World! God Help Us!…..

      Report Post »  
    • tower7femacamp
      Posted on February 21, 2011 at 4:46pm

      I can’t wait for JPM to cover their massive short of silver.
      By selling massive amounts of paper silver in the futures market, JPM has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver). In fact, reports indicate that JPM is short more paper silver than physically exists in the world.
      http://www.sfgate.com/cgi-bin/article.cgi?f=%2Fg%2Fa%2F2010%2F12%2F06%2Fbenzinga668905.DTL
      this is going to be big, I recommend everyone start buying physical silver and hold it
      yourself.

      Report Post » tower7femacamp  
    • KICKILLEGALSOUT
      Posted on February 21, 2011 at 5:26pm

      Where is Congressman Weiner? Didn‘t he say everyone was being deceived and don’t be fooled into buying Gold? How about someone in the media follow up with him about the current price of Gold and what he said not too long ago, you know make Weiner feel like a Wiener.

      Report Post » KICKILLEGALSOUT  
1 2

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love