Isra-Mart srl:Oil prices jump on Libyan conflict, Japan earthquake response

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Isra-Mart srl news:

Oil prices have jumped by more than two dollars a barrel in morning trading as the market responded to the on-going air strikes by allied forces against targets in Libya.

The price of a barrel of Brent Crude rose by $2.26 to a morning peak of $116.19 a barrel, while US light, sweet crude rose $2.13 to $103.20.

Analysts said the latest price spike was driven by fears that the escalating conflict in Libya could damage the oil infrastructure of the world's 12th largest oil producer, as well as ongoing concerns that protests in Bahrain could spread to neighbouring Saudi Arabia, disrupting oil supplies from the world's largest producer.

"I can see uncertainty and fear driving the price of oil higher in the short term," Matthew Lewis of CMC Markets told BBC News. "At this stage, it looks like Libya has further to play. Gaddafi still seems very defiant... We'll see further spikes and shocks in the oil market this week."

There were also Reuters' reports that Japan has bought all available crude oil stocks in Asia in the wake of last week's devastating earthquake and tsunami, prompting speculation that demand for oil will increase significantly as the country moves to rebuild its damaged infrastructure.

The on-going oil price volatility will further increase pressure on businesses to adopt more fuel efficient transport policies.

In addition, further rises in oil prices makes it virtually certain that Chancellor George Osborne will ditch the planned increase to fuel duty, while according to reports this morning the Budget will also scrap a planned increase in Air Passenger Duty.