Libya & oil: a small price for freedom
The big finance headline this morning concerns the rising cost of oil due to the continued unrest in Libya and other North African and Middle Eastern nations.
As I type this, the price of Brent Crude Oil Futures stands at $117.74/barrel.
Brent Crude reached a price of $119.79 a barrel in early trade on Thursday before falling back slightly. It has risen from $103.06/barrel since the weekend.
These rising oil prices are largely a consequence of oil companies ceasing production in Libya.
Libya is the 12th largest oil exporter in the world, with most of its oil exports going to Europe.
One implication of a sharply increased oil price is higher petrol prices for drivers. Some commentators this morning are suggesting that oil rising to $150/barrel would result in a litre of unleaded petrol rising to 140p.
Petrol currently costs an average of 128.9p, with diesel at 134.3p.
Of course a high oil price has other financial and economic implications.
Asian and European stock markets have opened down sharply this morning. As I type this, the FTSE 100 index of leading UK company shares stands at 5,887.79, down 35.74 points or -0.60%.
The FTSE 100 has fallen from 6,082.99 since the end of last week – a fall of around 3.2%.
It could take several days or even weeks before the current situation in Libya is resolved, so investors should expect continued volatility in the near term. A well diversified portfolio, with exposure to the full range of different asset classes, will not be fully exposed to loss-making investments as a result of these events.
If oil does rise to $150/barrel in the near-term and consequently pushes up petrol to 140p a litre, hopefully most people would consider this to be a small price to pay for the release of 6.5m people from an oppressive regime.
Photo credit: Flickr/gripso_banana_prune