New York: Crude oil price slumped on Saturday, dropping below USD 100 per barrel, after a massive earthquake slammed into northern Japan. Japan is the third-largest oil importer in the world. "Everyone was waiting for this 'Day of Rage'" in Saudi Arabia, "but at this point, there aren't any headlines" to suggest that the country's oil fields are in danger.
Benchmark West Texas Intermediate for April delivery tumbled USD 1.60 to USD 101.10 per barrel in midday trading on the New York Mercantile Exchange, raising fears of a shock to the global economic recovery. Prices fell as low as USD 99.01 per barrel at one point.
It's unclear how much its economy will be affected by the disaster, yet the news helped slow down what had been a sharp, three-week rally in oil markets.
Oil prices have surged 24 per cent since the middle of February, crossing the USD 100 mark as uprisings in Libya forced much of the country's oil production to shut down.
The wave of pro-reform protests across North Africa and the Middle East have rattled energy markets, and many oil traders fretted about unrest spreading to Saudi Arabia.
"This is a market that's ripe for a correction," analyst and trader Stephen Schork said.
The tsunami that ravaged Japan hit the coast with a 23-foot (7-meter) wall of water, sweeping away ships, cars and homes.
"Our initial assessment indicates that there has already been enormous damage," Chief Cabinet Secretary Yukio Edano said.
A large fire erupted at the Cosmo oil refinery in the city of Ichihara and burned out of control with 100-foot (30-meter) flames leaping into the sky. Other refineries were shut down as a precaution.
Exxon Mobil Corp. suspended operations at the TonenGeneral Sekiyu Kawasaki Refinery, which the company partially owns, though it doesn't appear to have suffered any damage.
TonenGeneral refines 296,000 barrels per day of crude.
Royal Dutch Shell also reported no damages to its refineries in Japan or at any of the 3,900 Showa Shell-branded stations in the country.
Tesoro Corp. said its refineries in Hawaii and Alaska were safe, though a few retail stations in Hawaii were closed as a precaution. Halliburton Co. said all of its employees working in the region are OK.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said the tsunami will likely depress oil demand as Japan's economy picks up the pieces, though it's hard to say for how long.
The oil rally may have cooled this week, but it could turn right back around, Ritterbusch added.
"Libya is still a big deal," he said. As long as the country has no clear leader, world supplies will continue to be under increased pressure. "That's going to continue to drive oil prices."
New York: Crude oil price slumped on Saturday, dropping below USD 100 per barrel, after a massive earthquake slammed into northern Japan. Japan is the third-largest oil importer in the world.
"Everyone was waiting for this 'Day of Rage'" in Saudi Arabia, "but at this point, there aren't any headlines" to suggest that the country's oil fields are in danger.