Libya clashes hit world stocks as oil surges

Amid reports of more than 200 deaths, investors are worried about the escalating violence in one of Africa's biggest oil producers.

By MSNMoney partner Feb 21, 2011 9:58AM

The Associated Press

LONDON (AP) -- Fears that Libya is heading toward civil war weighed on world stocks Monday and pushed oil prices sharply higher.

With reports suggesting that more than 200 people have been killed in clashes that 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."

The oil markets have been the main point of interest, especially as Libya accounts for a chunk of the world's oil supplies at a little under 2 percent of global output.

With BP saying it is "very likely" to evacuate employees in the coming days and investors wondering which oil producing country may be next to face the wrath of its people, oil prices have spiked sharply higher. Benchmark crude for March delivery was up $5.22 at $91.42 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude was up $4.21 at $106.73.

Investors' appetite for risk in other markets, meanwhile, fell sharply.

When risk appetite is low, investors usually look for shelter in the perceived havens of the U.S. dollar and gold at the expense of more risky investments such as stocks.

"Political risks 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."

By midmorning London time, Germany's DAX index was 0.7% lower at 7,376, while the CAC-40 in Paris fell 0.6% to 4,131. The FTSE 100 index of leading British shares was down 0.2% at 6,069.

Markets in the U.S. are closed for Presidents Day.

In currency markets, the euro fell 0.2 percent to $1.3660, while the dollar was unchanged at 83.16 yen. Among commodities, an ounce of gold spiked over $10 to $1,399.

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% 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% to 2,932.25. The Shenzhen Composite Index gained 1.9% to 1,297.66.

Elsewhere, Japan's Nikkei 225 stock average rose 0.1% 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% to 23,508.62, while South Korea's Kospi fell 0.4% to 2,005.30 and Australia's S&P/ASX 200 shed 0.7% to 4,900.

© 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. 

Feb 21, 2011 4:02PM

What about U.S Oil Reserves? Oil and Foriegn Aid shoul be Tit fot Tat. For all of these OPEC nations,  you Jack up your prices we reduce our Foriegn Aid to you.


Or  do we have a government without the balls to stand up for the consumer?


Hey, here is another one, quit exporting all of north sloper oil, keep the crap at home.

Feb 21, 2011 2:57PM
This is an excuse to raise oil price not a reason to raise oil prices, and it's all about M-O-N-E-Y, money.
Feb 21, 2011 11:11AM
The real cost to produce the oil is not going up, only the fear of supply loss is driving the prices.  We pay through the nose on fear alone!  The Middle East will ALWAYS be volitale so oil futures jump everytime Omar spills a can of oil in his driveway while changing oil in his car.  This country (USA) has more natural gas than any country and more shale oil but we don't take advantage of that and environmentalists stifle every attempt to open new oil fields.  John and Jane Q. Citizen continue to be the victims of our country's foolhardiness.  The economy won't recover at $4 a gallon gas and we're headed that way again.
Feb 21, 2011 10:43AM
Sure glad we decided not to drill for our own oil.  Keep it in the ground and pay thru the nose. More windmills...that's what we need...yea right....
Feb 21, 2011 2:04PM

How long do we let the speculators and Bernanke run the show? As mentioned, crude was down about $10/barrel and gas never went down. It goes up like a rocket at the first talk of any kind of problem, trivial or not.

Bernanke has lined the banks pockets with out money and now is lining Wall St. the same way with his policies.

I tell ya, this country can't take $5 gas. Our politicians set on their fingers and when not doing that wring their hands. All the while one hand is out for all the contributions they can get. We need term limits and to get rid of a president who is in over his head.

Do all of you know that the Fed doesn't take food and energy into account when figuring inflation? How stupid is that? It just shows you they work for the banks and Wall Street, not the country, not you or I. Then to top it off Government Motors has the guts to hand out huge bonuses. It you're not a govt. employee you better figure out how you're going to make it in the future, cause we are going to have cuts like you can't believe. I just wish Canada wasn't so damn cold. They seem to be doing all right. What's going on here?

Feb 21, 2011 3:27PM

VolckerFan, I disagree with you on many things but agree on some. Being a retired farmer the last thing we need is corporate farming. Money is available for farmers. There isn't enough land. But the speculators....hedge funds, pro traders, 401k, 403b acct. traders....are the ones running up the food prices. That and the cost of diesel to deliver it. As for Biodiesel, it's dead in the water. Do you know the shelf life of biodiesel?? Not very long. It starts forming fungi that will plug filters, pumps, injectors, etc. Unless you have a direct source from a refinery it's useless. Ethanol takes a hit because people say it takes corn that could be used for food. Did you know that the byproducts of ethanol are mainly used as livestock feed? DDG's...Dried Distillers Grain can replace over half the ration of corn to livestock. Going back to the speculators, let's again add in Wall Street sucking in money and taking huge bonuses from people who don't know what to do. Let's talk about all the money the banks have accumulated but won't lend. Accumulated from the average Joe and Jo thru the stimulus...we bailed their asses out...and now are back to huge bonuses and speculating....see Goldman Sachs' actions in the grain markets before expiration of every option. The people aren't in control of their lifes. Bernanke is. Inflation is. Fat cat CEO's are. Banks are.

Again, there's only so much land to farm and it's farmed to the max now. IF we have a drought this summer, I hope everyone has a garden, and sticks something away for winter. Of course, Bernankes' friends won't  have to worry, they will be able to afford what is available. The rest of us just won't. Also, your figure of 5-10 cents for a refrigerator is really out of whack. A dollar raise in fuel will put them up $20-50 easy. Other modes of transportation aren't available to a lot of us.  We are in a big mess and not facing it will get us even deeper so I guess that's where we are headed. The politicians can't agree on anything except they want re-elected.

Feb 21, 2011 3:16PM
maybe if our government and oil producers in the USA stop selling oil to other countries we would have our own at a set price. but hell know. stick it to the little guy 
Feb 21, 2011 11:24AM

Way to go, OBONGO administration!!!  Lets put a moratorium in place and not drill for our own oil here on our lands and waters.... lets be slaves to foreign countries and OPECS price gouging,  thanks to conflicts in libya, egypt, etc..... Lets pay $5.00+ per gallon of fuel this summer!! Why not????  Might cut down on the traffic around here if less people can afford to drive, right? .....  Despite this, there are those with strong arguments against tapping our own natural resources on our own lands and waters.... Why don't these people have the intelligence to realize what this will do to ~EVERYTHING~ that we need to survive?  Most of all.. the obvious cost of fuel and food....  It scares me to wonder what the hell is wrong with the world, the people that lead it and those that support these destructive policies... How can our leaders, despite their political affiliation, let any of this garbage happen? This world is seriously broken... how in God's name do we fix it???

Feb 21, 2011 1:39PM
Once again, this is a prime example of greedy traders taking advantage of a bad situation to further line their pockets with huge oil profits. There are currently no disruptions and until that happens, these idiots shouild not be jumping oil prices. This is good old Wall Street BS at its best and as always, the poor in this country will be the ones who suffer.
Feb 21, 2011 4:29PM
This is some BS. The prices go up for these arbitrary reasons that have nothing to do with the oil we currently buy. Do we get a refund if there is no Civil War? Or is the money just pocketed by the oil companies?
Feb 21, 2011 2:40PM

Dek:  I don't put the blame on Reagan.  Yes. he did pull down the idiotic but symbolic solar panels Carter put up (They didn't actually do anything due to poor placement)  The balme goes on the american public that didn't care once the crisis was over and fuel was cheap again.  Same thing happened in 2008.  Prices shot up, and people cared.  They dropped and people resumed being idiots.

Feb 21, 2011 5:03PM
This is A really good example of why oil and other strategic non-renewable  resources need to be traded on a closed, closely regulated market, open only to traders and entities that will actually take delivery  of the oil for actual use. That  means using it, and not to put on a barge or tanker and parked to hoard it and create shortages. Wall Street, hedge funds and other institutional investors need to be kept out of the oil business.  They create the volatility , and the constant paper trading of futures does nothing but create an artificial demand, then higher inflated prices that are totally disconnected from actual supply and demand dynamics.  Like it or not, this country needs oil to survive, people need gas to go to work, farmers need it to grow food, trucks need fuel to deliver food and goods, same for trains and the rest of our transportation infrastructure.  Washington has already seen what  greed driven speculation  in the oil markets can do , and the damage it does to the average American and the American economy. We have not even recovered from the last oil bubble and the speculators could not even wait for the econmy to get up and running again before they started driving up the price .  This country is going down if Wall Street is  not taken out of the equation.  They are not capable of anything but an uncontrolled lust for money that they will satisfy any way they can ,with no regard whatsoever of the consequences. They have almost tanked the world economy once and to leave the price of oil in their hands to speculate and manipulate at will is irresponsible.  Somebody in Washington needs to show some integrity and concern for the well being of this country and it's people and put the bastards in Wall street under a microscope and never let up. They have already shown the whole world they are not capable of conducting business above board and honestly.  They should not even be able to fart without having  to answer to to somebody. Unfortunately they will be allowed to put the economy in a free fall again before anyone in Washington will decide enough is enough, I think the people will have to decide that on their own. The politicians in Washington and bankstas on wall street are only interested in their own agenda,  and the American people are of no concern to them until tax time. Eventually the American people will suffer to the point when they will have to take matters into their own hands. If nobody will take care of main street, main street will take care of itself. It will have no choice and the Constitution will back them up. 
Feb 21, 2011 1:40PM
It's whatever lie you choose to believe from wall street,it's about time we start holding these BASTARDS accountable for their actions.They are jacking the prices of EVERYTHING sky high to fuel their greedy appitite for the almighty dollar take a good look in the mirror you are not above everyone else,it's about time you BOZO'S get knocked down a few pegs.I hope your proud of your actions,you are really putting the squeeze on the senior citizens living on a fixed income.I hope you sleep well at night for what you do.Greed fuels your actions,sleep well.
Feb 21, 2011 11:06AM
Come now knarft Sr.; Don't you know we need all those windmills so we can supply electricity to the Volt cars.  We are so blessed with an abundance of tax money in this country we can use tax money to provide charging stations free of charge to those who buy volt cars.  Why just last week our local power company wanted everyone to know that they were not spending peoples utility bill receipts for this; it was only grant money they were spending.  These electric supplying wind mills will generate SO Much electric power (gag).  Oh...just don't run the new electric lines through the desert...the people of California have spoken..and they do not want the pristine desert beauty ruined.
Feb 21, 2011 5:05PM
Our country has put it's  mobile future into the hands of the most unstable region in the WORLD. We started to drink our own Kool Aid really believing we were the most powerful country in the world ?? The oil producing countries (Middle East )  had, has and will continue to have us by the balls ...until we can come together as a United Sates of America and literally tell them to pack sand..."We are doing our own thing with some different outcomes ".... They rule, control and have complete domination over us ... and they do not even have to attack us on our own soil.... Our Leaders are allowing it to continue because they believe that a relationship with them is worth having ?? We have to beg to put gas in our cars ?? Who is the most powerful now ??      
Feb 21, 2011 4:49PM
uh oh....a camel in the desert just farted.....quick-quick raise the price of oil!!!
Feb 21, 2011 12:25PM
I'm almost sure that I saw the price of oil drop almost ten bucks a barrel over the last week or so, and I'm wondering why that didn't affect the price at the pump.  And that was during the height of the Egypt thing.  Now all of a sudden things are going to take a drastic change?   With all the weather factored in, it still didn't have as much of an impact.  Whatever happened to that agency proposal awhile back that said they were going to try and put a stop to the oil speculating market? 
Feb 21, 2011 3:37PM
the president americans hated the most was gonna address this but instead elected reagan who was totally in the back pocket of big oil, so you are right, we are a nation of bozos and will continue to be
What an asinine post. Typical liberal Democrat bot. Carter's only plan was to get us all on solar power. So here we are over 30 years later and all solar can do for us is power some big screen TVs at best in our homes. He was against nuclear power, which ironically the liberal left hates so much even though it's widespread in Europe - that the liberal left wants us all to mimic socioeconomically.

No, the real travesty is that we cannot drill in our OWN back yard, and the only oil we do drill and produce is sold to other nations! We have a century of untapped oil reserves and shale reserves which can be converted to oil. This can be used until we develop REAL alternative energy, not some liberal pipe dream. And I love these comments about Big Oil being in the pockets of politicians. Do you liberals not know that GE is in bed with Obama on Big Green Energy? (Hey I like that cute "Big" word in front of everything that liberals tend to like so much...BIG government, BIG unions!). 

Yeah the liberal so-called Progressives want us all on windmills and solar power. Yeah, ask Texas during that massive winter storm how those rolling blackouts went with all those windmills across Texas. They even had to get power from freaking MEXICO for a while.

So no, Carter was and is a failed president with failed ideas and failed policy (especially in the Middle East - just ask the hostages held in Iraq for 444 days). Meanwhile, back in the real world, we need to provide our own oil energy just like Russia does (including drilling sideways into US territory) and China is working on doing. You Democrat liberals can sit in the back.

Feb 21, 2011 1:48PM
Huh?  Stop blaming the "oil companies", "wall street", and put the blame squarely where it belongs......we are dependent on foreign oil, period.    Open up ANWAR,  drill where we know there is oil.   And all you urbanites that drive everywhere alone, especially the California freeways need to take responsibility for their own carbon footprint.    If you use it, then you have to let it be drilled in your own backyard.    Spoiled consumers, consume, consume, but do not want the exploration or production anywhere near them, but they sure want plenty of gas to fill their tanks before taking to the freeways (alone). 
Feb 21, 2011 3:39PM
When it rains in Boston the price of oil goes up,When camels go on strike the stock market goes down.Any more news of importance?
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