Nomura Says Unrest Could Send Oil To $220

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Nomura Holdings said if escalating political tensions in the North African nations of Algeria and Libya result in suspended oil exports, crude futures could surge to $220 a barrel, easily surpassing the July 2008 record of over $147 a barrel. NYMEX-traded crude for April delivery briefly touched $100 a barrel today before settling at $98.10.

''If Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel and OPEC spare capacity will be reduced to 2.1 million barrels a day, similar to levels seen during the Gulf war and when prices hit $147 in 2008,'' Nomura said in a note, Bloomberg News reported.

Both Algeria and Libya are OPEC members. Algeria produced 1.25 million barrels a day last month, while Libya pumped 1.59 million a day, according to data compiled by Bloomberg. Nomura said the $220 figure could be actually be a low estimate because oil speculators could drive the price higher on disruption concerns.

One source quoted by CNBC yesterday said oil could surge to $140 if supply from Libya is disrupted, but the price could surge to $200 if the region's political instability spreads to Saudi Arabia, the world's largest oil exporter. Barclays estimated that the current situation in Libya has impacted 1 million barrels a day in supply.