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| Oil price up on Mid East turmoil and Japan energy needs | Oil price up on Mid East turmoil and Japan energy needs |
| (40 minutes later) | |
| The oil price has rebounded as markets refocus on the Middle East, as well as Japan's energy needs. | The oil price has rebounded as markets refocus on the Middle East, as well as Japan's energy needs. |
| Brent crude futures broke back above $113 a barrel, while US light, sweet crude reached $100 again. | Brent crude futures broke back above $113 a barrel, while US light, sweet crude reached $100 again. |
| With Libyan production already near zero, markets took fright at the turmoil in Bahrain and the risk it may spread to neighbouring Saudi Arabia. | With Libyan production already near zero, markets took fright at the turmoil in Bahrain and the risk it may spread to neighbouring Saudi Arabia. |
| Meanwhile, with much of Japan's nuclear power sector shut down, the country is set to increase energy imports. | Meanwhile, with much of Japan's nuclear power sector shut down, the country is set to increase energy imports. |
| Energy imports | Energy imports |
| The market had initially taken fright at Japan's earthquake and tsunami on Friday, with crude prices falling from recent highs on fears that Japanese demand would slump. | The market had initially taken fright at Japan's earthquake and tsunami on Friday, with crude prices falling from recent highs on fears that Japanese demand would slump. |
| Brent crude dipped to $107.35 earlier in the week, while US crude hit $96.21. | Brent crude dipped to $107.35 earlier in the week, while US crude hit $96.21. |
| Large parts of Japanese manufacturing have been shut down in order to assess damage from the twin disasters, and are likely to operate below capacity for months as the government rations electricity. | Large parts of Japanese manufacturing have been shut down in order to assess damage from the twin disasters, and are likely to operate below capacity for months as the government rations electricity. |
| Markets had feared this would also impact global production, as many industries - such as cars and computer manufacturers - rely on Japan to produce critical parts. | Markets had feared this would also impact global production, as many industries - such as cars and computer manufacturers - rely on Japan to produce critical parts. |
| However, analysts say it is becoming increasingly apparent that with its electricity generating capacity severely limited, Japan will need to significantly step up its energy imports. | However, analysts say it is becoming increasingly apparent that with its electricity generating capacity severely limited, Japan will need to significantly step up its energy imports. |
| Japan's nuclear capacity - which accounts for nearly 30% of electricity generation - has been hardest hit, with 11 of its 54 reactors not operating. | Japan's nuclear capacity - which accounts for nearly 30% of electricity generation - has been hardest hit, with 11 of its 54 reactors not operating. |
| In particular, the country is expected to need more finished fuel products, as well as coal and liquefied natural gas (LNG), which can be used for power generation. | |
| "Refined products such as fuel oil and gasoil are trading at premiums to Brent, and that should put upward pressure on Brent," said Thorbjorn Bak Jensen, an oil analyst at Global Risk Management. | |
| Japan has already asked Indonesia to increase LNG exports, while Shell also volunteered to up its shipments. | |
| Spillover fear | Spillover fear |
| Meanwhile, events in the Middle East have resurrected fears about oil supplies. | Meanwhile, events in the Middle East have resurrected fears about oil supplies. |
| In Bahrain, a clampdown on protestors - supported by 1,000 Saudi troops invited into the country - resulted in six deaths on Wednesday. | |
| The state-owned Bahrain Petroleum Company had to cut back some of the 250,000 barrels-per-day output at one of its refineries on Thursday because of staff shortages related to the civil unrest. | The state-owned Bahrain Petroleum Company had to cut back some of the 250,000 barrels-per-day output at one of its refineries on Thursday because of staff shortages related to the civil unrest. |
| "If things continue, I think we will be seeing a rise in the price of products, because at this point we don't know when the staff will return to work," said one Bahrain-based trader. | |
| Although Bahrain's crude production is tiny, markets fear that unrest may now spill over into neighbouring eastern Saudi Arabia, which is home to a large part of the oil infrastructure of the world's biggest crude producer. | |
| As in Bahrain, that part of Saudi Arabia is home to a predominately Shia Muslim population that wants to assert its rights against a Sunni monarchy. | As in Bahrain, that part of Saudi Arabia is home to a predominately Shia Muslim population that wants to assert its rights against a Sunni monarchy. |
| Protests by a few hundred Shia in Saudi Arabia on Wednesday were also put down by security forces. | Protests by a few hundred Shia in Saudi Arabia on Wednesday were also put down by security forces. |
| Furthermore, Iran - which is run by Shia clerics - has been voicing support for the Bahraini protestors, and there are fears that the country, which is another major oil-producer, may intervene directly. | |
| Meanwhile, in Libya, the rebels appeared to be holding their own against Colonel Gaddafi's troops, suggesting the civil war may last longer than feared. | |
| Libyan output - which accounts for 2% of global production - has already been reduced to almost zero by the conflict. | |
| However, analysts say that even with a quick Gaddafi win, Libyan oil will be subject to sanctions, and much of its export facilities have already been damaged. |