The son of Libyan leader Colonel Gaddafi this morning warned that “oil will stop” if civil war broke out in the country.
In a speech shown on state television, Sayf al-Islam Gaddafi added that “foreign companies will leave Libya tomorrow” as factional fighting erupted.
His speech came as anti-government protests spread for the first time to the capital, Tripoli, where global oil corporation Shell has its Libyan headquarters. Col Gaddafi is the Arab world’s longest-serving leader, ruling the state since a coup in 1969.
Libya is the holder of the largest crude reserves on the African continent and the single largest supplier of oil to Europe. It has proven reserves of 42bn barrels and over 1.3 trillion cubic metres of gas.
And the country is a major focal point for energy firms, because only 25% of its surface territory has been so far explored.
Brent crude rose by almost $1.50 a barrel to a high of $104.60 this morning following a report by Al Jazeera which said that a strike at Libya’s Nafoora oilfield had halted production.
And yesterday, the head of an eastern Libyan tribe threatened to cut oil exports to western countries unless the government ended its “oppression of protesters”.
BP is today reported as halting exploration work in the country and evacuating families and non-essential staff. Austria’s largest oil firm OMV is also pulling out all its non-essential workers.
And in an added twist to the turmoil, two Iranian warships are reportedly set to transit the Suez Canal to the Mediterranean Sea tomorrow.
About 2.5% of the world’s oil passes through the waterway, and any international incident which could stall shipping could have a disastrous knock-on effect.