Volatile world oil prices jumped again on Thursday, with financial analysts saying that even bigger increases could soon follow if political unrest continues to spread in the Middle East.
The price for Brent crude oil on the London market reached a 30-month high of nearly $120 a barrel on Thursday. But the price retreated somewhat after Saudi Arabia, the world's biggest oil exporter, offered assurances that it would increase production to account for any cutback in Libya. The price of oil on the New York market topped $100 a barrel and then fell below that level.
Libya normally produces at least 1.6 million barrels of oil a day, but now at least a quarter and possibly much more of that output has been halted. As turmoil engulfed the country, several international firms sharply curtailed or shut their Libyan operations. China says one of its oil facilities was attacked.
Analysts at several major financial services companies said if there is more disruption of Middle East oil production, prices would likely jump substantially more than they already have.
Goldman Sachs Group said there is "significant upside risk" of higher prices. A BNP Paribas analyst said that when "geopolitics in the Middle East are at play," then "all conventional bets" on the price of oil are off. Other analysts at Nomura Holdings and Oil Outlooks & Opinions said the price could hit $175 to $220 a barrel if there are further production cuts in the Mideast.
Various financial analysts say the oil price spikes could be particularly damaging to the global recovery from the worldwide 2008-2009 recession, including in the United States.
As oil prices have jumped in recent weeks with the political turmoil in the Mideast, U.S. airlines have already increased fares four times this year. Gasoline prices paid by U.S. motorists are also climbing steadily, up about 30 cents a gallon over the last three months.