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
