Brent oil trading at $115 on new Libya peace deal rumour

3 March 2011 3 March 2011

BonTrade

Brent oil futures open Thursday’s trading session back near $115 a barrel as news emerges that Libyan leader Gadhafi had agreed to a plan proposed by Venezuela’s Hugo Chavez to seek a negotiated settlement (peace deal) with Libyan rebel forces.

Latest Brent Oil Price

In London, Brent crude oil futures for April 2011 delivery was trading at $114.91 barrel, 07.40 GMT this morning on the ICE Futures Exchange. The contract lost over $1.50 in early trading this morning.

The Gadhafi Peace Plan

The new peace deal plan would involve a commission from Latin America, Europe and the Middle East trying to reach a negotiated outcome between the Libyan leader and opposition forces which have seized control of large areas of the North African oil producing country.

The problem with this proposed plan is that Libyan rebel forces will not be interested to listen to much of the content, as their intentions remain the same, for the current Libyan leader to step down.

“near unraveling of the Gadhafi regime has riled up the markets in a way that Egypt and Tunisia did not. With Libyan oil exports significantly cut back on account of the unrest, oil prices have pushed higher.” said analysts at MF Global, prior to the reported acceptance of the peace proposal.

Temporary Dip for Brent Oil Price?

The new developments in Libya may not end analysts concerns that a pro-democracy movement could spread to large scale oil producer Saudi Arabia, where demonstrations are reportedly scheduled for March 11th and 20th in the Middle East’s main oil producing country.

Brent oil’s recent gains look set to continue as oil production figures out of Libya show that upto a million barrels of oil per day are being “shut in” according to the IEA. With this latest figure in mind, together with future planned demonstrations in Saudi Arabia, oil prices will remain very bullish.