(Oil prices, Libyan political crisis story updated for Tuesday trading)
NEW YORK ( TheStreet) -- Oil prices surged on Tuesday with the escalation of violence in Libya, and the first tangible impact to global oil supply from the wave of political turmoil across Northern Africa and the Middle East.
Brent crude was above the $106 mark on Tuesday and U.S. crude oil futures spike from an open at $90 to above $94, reaching as high as $98 during Tuesday trading. The surge in the price of oil on Tuesday saw brent crude touch above the $108 mark. In both cases, the Tuesday spike brought the highest oil prices since the fall of 2008, and the biggest equity markets dip since last August.
In Libya, there were reports of leader Moammar Kadafi using gunships, warplanes and mercenaries against mostly unarmed political protestors. The U.N. Security Council called an emergency meeting on Tuesday.Libya is the third-largest oil producer in Africa, and 12th-largest oil exporter globally. Libya is the first country where recent political protests across Northern Africa, from Tunisia to Egypt, has impacted oil supply. Libya accounts for roughly 1.7% of world crude output. Reuters reported on Tuesday morning that Libya had declared force majeure on its oil exports, which would amount to roughly 1.5 million barrels per day. Force majeure is a legal clause which removes contractual liability from a party if uncontrollable events occur. The winds of political change across Northern Africa and the Middle East have stoked fears of global oil supply disruption, and ever-higher crude prices, yet it wasn't until the Libyan situation descended into chaos that the fears became tangible in terms of oil production and oil export impact. Take Egypt, where historic events have taken place, but in a country that is a net importer of oil. There were fears of a Suez Canal closure in Egypt, and some specific energy companies with production in Egypt were caught up in the headlines, but at least so far, the Egyptian political crisis has not been an energy sector crisis maker. By contrast, any way the data is crunched, Libya is a much bigger deal for the global markets, starting with its roughly 1.7 million barrels of oil per day, according to the International Energy Agency (IEA), and its position as the third largest oil market in Africa.