Baku, Mart 29 (AZERTAC). Oil fell sharply today as rebels made gains in Libya, raising hopes that the country could resume oil shipments in the near future.
Light, sweet crude for May delivery settled down $US1.42, or 1.4 per cent, at $US103.98 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled down US79 cents, or 0.7 per cent, at $US114.80 a barrel.
A Treasury Department official said Libyan rebels would not face sanctions if they resume oil production in fields formerly operated by Colonel Muammar Gaddafi`s regime.
The remarks came after Libyan opposition fighters pushed further west toward Sirte, Colonel Gaddafi`s hometown, after retaking strategic oil infrastructure in Brega and Ras Lanuf over the weekend.
Oil exports from Libya could resume "in less than a week," rebel representative Ali Tarhoni said.
Mr Tarhoni added that current production of 100,000 to 130,000 barrels a day could "easily" be raised to about 300,000 barrels a day. Before the conflict and Western sanctions cut off Libya`s oil exports, the North African nation exported 1.3 million barrels a day of crude.
"The market has priced in a $US10 to $US15 (Libya) risk premium...The market can lop off a little bit of that premium, and that`s what we`re seeing," said Gene McGillian, broker and analyst at Tradition Energy.
However, analysts cautioned there`s no guarantee that Libyan oil will return to the market anytime soon despite the reports of rebel progress.
"In today`s markets, you see traders taking these news items and automatically making projections," said Andy Lebow, senior vice-president at brokerage MF Global. "I do think that may have been a market mover. In my own mind, that`s crazy because it`s not going to happen tomorrow."
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