* Eastern Libya breaks free from Gaddafi's control
* Concern that other big producers could suffer outages
* Repsol suspends operations in Libya
(Updates prices, progress of revolt)
By Claire Milhench
LONDON, Feb 22 (Reuters) - Both Brent <LCOc1> and U.S. crude
oil <CLc2> rallied to 2-1/2 year highs on Tuesday on concerns
the revolt in Libya could spread to other major oil producers as
companies suspended operations and ports were disrupted.
At 1505 GMT, Brent crude oil futures for April delivery were
up 71 cents to $106.45, after earlier touching $108.57 while
U.S. crude for April delivery was up $5.12 at $94.83.
The jump in U.S. crude is partly explained by the fact that
electronic trading of the contract occurred on Monday, but there
was no settlement close as the exchange in New York was closed
for a holiday.
Both oil contracts gave up some gains after comments from
the Saudi Arabian oil minister that Saudi Arabia and other OPEC
members were ready to meet any shortage from disruption caused
by the spreading unrest. []
Libya produces around 1.6 million barrels of oil per day,
and OPEC has spare capacity of up to 6 million barrels, so even
if all exports were stopped this would not create a supply
shortage, said Carsten Fritsch, an analyst at Commerzbank.
"It is more fears that this might spread to places like
Algeria, Kuwait or the United Arab Emirates," he said.
Libya is the third-largest oil producer in Africa, and has
Africa's largest proven oil reserves at 44 billion barrels,
according to the U.S. Energy Information Administration.
Trading sources reported that operations at Libyan oil ports
were disrupted by a lack of communications. "The assumption is
that the ports are either already closed or are closing," said a
trader with a company that buys Libyan oil. []
Repsol, the Spanish oil and gas company, said that it had
suspended all operations in Libya, including stopping oil
production from the El-Sharara field.
This followed staff evacuations by other European oil and
gas firms such as Shell <RDSa.L> while German company
Wintershall has wound down production as a precautionary
measure. [] []
Iran has also stopped its oil-related activities in Libya
and will evacuate staff in the next 48 hours [].
Witnesses have said Libyan leader Muammar Gaddafi has used
tanks, helicopters and warplanes to put down the revolt, bombing
parts of the capital Tripoli, which has drawn condemnation from
world leaders [] [].
Rebel soldiers said the eastern region of Libya had broken
free from Gaddafi, who is reported to be planning to address the
nation "shortly" [] [].
The Arab League was planning to hold an emergency meeting in
Cairo at 1500 GMT to discuss the Libyan revolt. []
U.S. crude for March delivery <CLc1>, which expires on
Tuesday, was up $5.31 at $91.51 after also earlier touching a
two-and-a-half-year high at $94.49.
Analysts and investors have been growing increasingly
concerned that tensions in Bahrain could spill over the border
into Saudi Arabia. []
"It's like one of those Australian bushfires -- once it
takes hold, it's very difficult to put out," said Michael
Hewson, an analyst at CMC Markets. "Until the situation in the
Middle East settles down, you are going to have very wild price
swings."
SUPPLY DISRUPTION
Saudi Arabia is hosting the International Energy Forum in
Riyadh today and attendees have been voicing their concern about
rising oil prices [].
The talks aim to narrow the gap between producer and
consumer nations, but the turmoil in Libya has overshadowed the
event, forcing ministers to send messages of reassurance to the
market.
James Zhang, oil analyst at Standard Bank Commodities said
that although OPEC and the IEA are likely to act in the event of
severe supply disruption, they are likely to be behind the
curve. "Therefore, we expect a volatile market for oil in the
near term," he said.
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Factbox on Libyan oil production, exports: []
Libyan oil map: http://r.reuters.com/jem28r
Interactive factbox on MidEast, Africa:
http://link.reuters.com/puk87r
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(Additional reporting by Francis Kan; Editing by Alison Birrane)
