Crude prices tumbled in Asian trade Monday on prospects of Libyan oil production getting fully back on stream, after a rebel advance deep into Tripoli left Moamer Kadhafi's fate in the balance.
Brent North Sea crude for October delivery plunged $2.74 to $105.88 a barrel from Friday's close.
New York's main contract, light sweet crude for September delivery, slid 78 cents to $81.48 a barrel. It had risen to more than $83 in early morning trade, but was driven down partly by concerns about the US economy.
'This is really the main news event,' Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore, said as veteran strongman Kadhafi's four-decade rule in Libya appeared to unravel.
'Rebels have entered Tripoli... there have also been reports Kadhafi will get out of the country,' Shum told the AFP.
Libya, a key crude-exporting nation that was producing some 1.49 million barrels per day before the rebellion broke out in mid-February, has seen its output slashed significantly since the revolt began.
About 85 per cent of Libyan oil output was exported to Europe until the revolt disrupted the country's production.
Brent crude from the North Sea would be particularly affected by the likelihood of Libya gradually resuming supplies to the European market, analysts said.
'The impact of that on the oil market should be bearish because going forward, Libyan oil production will come back on stream and that should put downward pressure on oil,' said Shum.
'It's really the geopolitical issue in Libya on top of all the other macroeconomic factors.'
Apart from the situation in Libya, New York crude erased earlier gains as traders worried that US demand will be hit after recent data indicated the world's biggest economy is stalling, analysts said.
Source : New Age
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