Libyan crisis

Saudi Arabia has raised oil output about eight percent to above nine million barrels per day (bpd) to make up for a near halt in Libyan exports, an industry source said, helping prices fall further from the highest since 2008.

Some European oil firms said they were looking to buy more crude from Iran and the West’s energy watchdog, the International Energy Agency, said on Friday there was no need for an immediate strategic stock release.

The Saudi move follows reassurances from Riyadh earlier in the week that it was prepared to act to prevent shortages as a result of the rebellion in Libya that has sharply reduced the fellow OPEC producer’s 1.3 million bpd of exports.

“We have started producing over 9 million barrels per day. We have a lot of production capacity,” the industry source familiar with Saudi production told Reuters. That would be up more than 700,000 bpd from January.

Top exporter Saudi Arabia is the only country able to pump large amounts of extra oil at short notice. It sometimes steps in unilaterally to meet shortages or when it feels prices have risen to levels that may threaten economic growth or oil demand.

The Organization of the Petroleum Exporting Countries has resisted calls for a formal increase in output and says it does not plan to meet until June.

Iran’s deputy Oil Minister Ahmad Ghalebani told the semi-official Mehr news agency he saw no need for an emergency OPEC meeting and that Iran would continue to comply with OPEC policy on quotas.

“There is no shortage of oil in the global crude market stemming from political turmoil in Libya and other North African countries that requires an increase of Iran’s oil exports,” Ghalebani told Mehr.

Brent oil prices jumped close to $120 a barrel on Thursday, the highest since August 2008.

News of Saudi Arabia’s higher output came as disruption to Libyan supplies worsened. Libya is the world’s 12th-largest oil exporter and a source of high-quality crude oil, most of which flows to Europe.

Libya’s crude exports have almost halted because of reduced production, a lack of staff at ports and security concerns, industry sources told Reuters earlier on Friday.

Other oil producers may also see increased demand as a result of the Libyan crisis.

Italy’s third-largest oil refiner, Saras, is looking to Russia, Iran and other Caspian countries to replace crude oil shipments from Libya, an executive said on Friday.

The International Energy Agency, which represents consumer countries, has said between 500,000 bpd and 750,000 bpd of crude, less than 1 percent of global daily consumption, had been removed “at present” from the market.

European oil companies have not taken up Saudi Arabia’s offer of more supplies yet, industry sources have said, with some saying Saudi crude would not be a suitable substitute for Libyan oil at their refineries.

In addition, they are not in need of extra supplies for now. The IEA said on Friday European refiners threatened by a shortfall had covered their needs well into March