Oil prices up as turmoil escalates in Libya

TEXT OF STORY

BOB MOON: BP this morning announced it is “very likely” that it will evacuate it’s employees from Libya as violent protests rock that country. Its reportedly already shut down its Libyan operations. Oil’s up $3 a barrel so far today, to around $89.50. Libya is the world’s fourth-largest producer of oil, and even though Europe gets much of it, prices on the global market are interconnected.

From Cairo, Marketplace’s Mitchell Hartman reports now on Libya’s economic importance to the region — and to the U.S.

MITCHELL HARTMANN: On a street leading to the now-famous Tahrir Square, Egyptians are still chanting for freedom — and now also for Libya’s. Big difference between Egypt and Libya though — oil. Libya produces 2 percent of the world’s supply.

Speaking to the BBC, London oil analyst Nick McGregor laid out the potential impact.

NICK MCGREGOR: Very little Libyan oil actually finds its way directly to the U.S. Libya’s far more a key supplier to European markets for whom it’s the single largest supplier of oil and a considerable gas supplier.

The U.S. only started trading and investing with Libya in 2008, after more than a decade of sanctions. And even though Libya has so much oil wealth the profits only go to a small elite. There’s 30 percent employment even more among young people. That’s a combustible mix like in other oil-rich nations that are rumbling with revolution.

I’m Mitchell Hartman for Marketplace.