* Revolt has wiped out around half of Libya's oil output
* OPEC concerned but has ample oil to cover shortfall - Iraq
* Arab League says Libyan peace plan under consideration
* Investors eye growing instability in MidEast, N. Africa
(Updates prices, detail, comment, graphics)
By Christopher Johnson
LONDON, March 3 (Reuters) - Oil prices slipped on Thursday,
dropping by more than $3 briefly before recovering, after the
Arab League said a peace plan for Libya was under consideration.
The uprising against Muammar Gaddafi has reduced Libya's oil
production by around half, industry officials estimate, and
anything that helped restore output would help calm oil markets.
But traders were sceptical over the prospect of any
immediate end to fighting in Libya, where Gaddafi faces an
increasingly organised and confident rebel army. []
Iraqi Oil Minister Abdul-Kareem Luaibi said the Organization
of the Petroleum Exporting Countries was concerned about the
turmoil in Libya but had sufficient oil to cover any shortfall
caused by the rebellion there. []
Brent crude futures for April <LCOc1> hit an intra-day low
of $113.09 a barrel, down over $3 on the day, before recovering
to around $115.80 by 1000 GMT.
U.S. crude futures <CLc1> were down 35 cents at $101.88 by
1000 GMT, after hitting a low of $100.37. It settled at $102.23
a barrel in the previous session, ending above $100 for the
first time since September 2008.
"The 'peace plan' for Libya obviously knocked the market
lower but it doesn't seem to be having more than a passing
impact on prices, which will probably head higher again," said
Cartsen Fritsch, analyst at Commerzbank in Frankfurt.
Arab League Secretary-General Amr Moussa said on Thursday a
peace plan for Libya from Venezuela's President Hugo Chavez was
"under consideration". []
News network Al Jazeera said earlier the plan would involved
a commission from Latin America, Europe and the Middle East
trying to reach a negotiated outcome between Libyan leader
Muammar Gaddafi and rebel forces for this North African
oil-producing country. []
But Moussa said he did not know if Gaddafi accepted the plan
and, when asked if he had agreed the plan, Moussa replied: "No."
Tim Riddell, head of technical analysis at ANZ in Singapore,
expressed some scepticism: "If it's coming out of Chavez, it
might not have a great degree of substance," he said.
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Reuters Insider show on Libyan oil company head interview:
http://link.reuters.com/jys38r
Graphics showing:
Middle East unrest http://r.reuters.com/nym77r
Oil price shocks http://r.reuters.com/qes28r
Countries most reliant on oil http://r.reuters.com/dux28r
Calculator: Oil impact on GDP http://r.reuters.com/jux28r
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RISK OF CONTAGION
Revolt has ripped through the world's 12th-largest oil
exporter and knocked out around half of its 1.6 million barrels
per day (bpd) output.
Libyan output has fallen to 700,000-750,000 barrels per day
(bpd) as most foreign oil workers had taken flight, according to
Shokri Ghanem, the head of the North African producer's state
oil company. [].
Concern the conflict might disrupt more Libyan output and
that protest in the region may interrupt supply from other major
producers has spurred oil prices to two-and-half-year highs.
Brent rose to near $120 a barrel on Feb. 24.
A drawn-out battle between rebels and pro-Gaddafi supporters
in Libya could push oil prices above $130 a barrel, Ghanem said.
"The market still sees the risk of contagion to neighbouring
countries like Algeria which produced 1.2 million barrels per
day (bpd) in January," a BNP Paribas research note said.
"Should Algeria be affected, OPEC's spare capacity stands to
be significantly curtailed if it were to meet the additional
shortfall in supply."
(Editing by William Hardy
