Crude prices slump on siege of Tripoli

Aug. 22, 2011 at 10:21 AM
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LONDON, Aug. 22 (UPI) -- Oil prices plummeted in early Monday trading with Libyan rebels closing in on Tripoli, though an analyst said it could be years before production returns.

The whereabouts of Libyan leader Moammar Gadhafi were unknown as Libyan rebels started taking more solidified positions Monday in Tripoli.

The siege of Tripoli helped push oil prices down, with prices for Brent and the U.S. benchmark for crude trading down roughly 3 percent in early Monday trading.

The Organization of the Petroleum Exporting Countries opted to leave production quotas in place early this summer when economic analysts were worried high energy prices would trigger another recession. The International Energy Agency said that with Libyan oil shuttered by war, member states should release oil from their strategic reserves.

Caroline Bain, an economist at the Economist Intelligence Unit, was quoted by The Guardian newspaper in London as saying the end to Gadhafi's regime would help push crude prices lower even though production won't automatically rebound.

"It could take two to three years before output in some of Libya's more mature fields is restored," she said.

Libya was one of Africa's top oil producers before the war began in March. Pre-war production levels were around 1.6 million barrels per day.

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