HOUSTON — Trying to calm turbulent oil markets, Saudi Arabia’s oil minister said on Tuesday that the OPEC cartel was ready to pump more oil to compensate for any dropoff caused by unrest in the Middle East.
American consumers are now paying an average of $3.17 a gallon for regular gasoline, a steep rise of 6 cents a gallon in the last week. With consumers paying roughly 50 cents more a gallon than a year ago, oil analysts are warning that prices could easily top $3.50 by the summer driving season.
The intensifying turmoil in Libya drove oil prices sharply higher again on Tuesday, in part because at least 50,000 barrels a day of output had already been suspended. That is only a fraction of what Libya produces, but with foreign oil companies beginning to shut down operations and evacuate workers, the price of Brent crude, a benchmark traded in London, rose to more than $106 a barrel on Tuesday.
The price for light sweet crude that Americans usually use as a reference for oil prices remains more than $10 lower than Brent, rising $4.91 a barrel on Tuesday to $94.62 in New York trading.
Europe appears most immediately vulnerable to the strife in Libya, which pumps about 1.6 million barrels a day, or roughly 1.7 percent of world production. Over 85 percent of its exports go to Europe, more than a third to Italy alone. Libya sends only a small fraction of its oil to the United States, but since oil is a world commodity, Americans are not immune to the price shock waves.
Refineries on the East and West Coasts, for example, depend on Brent crude, meaning that the higher prices paid by Europeans are also pushing up gasoline and heating oil prices paid by many New Yorkers, New Englanders and other Americans.
Energy specialists said, however, that some relief might be on the way. Tom Kloza, the chief oil analyst at the Oil Price Information Service, estimated that the Saudis could pump an additional million to million and half barrels of oil in a matter of days. As the largest producer, Saudi Arabia is by far the most influential member of the Organization of the Petroleum Exporting Countries, with a reserve capacity to deliver an additional five million barrels to the world markets after several weeks of preparation. That is roughly three times more oil than world markets would lose if production were halted completely by unrest in Libya.
“Unless this unrest spreads to the streets of Jeddah and Riyadh,” Mr. Kloza said, “I think it’s a very manageable situation and prices are closer to cresting than they are to exploding higher.”
The Saudis have been satisfied with moderately high but stable oil prices over the last two years that have been supported by tighter OPEC production quotas set when prices collapsed three years ago. But prices began rising at the end of last year because of rebounding demand, particularly in China and other emerging markets, and they have spiked sharply this month because of the instability in the Middle East.
While Libya has been the immediate cause for the spike in oil prices in recent days, oil experts said traders were driving up prices because of concerns that a long period of instability in the Middle East was just beginning. They identified the protests in Bahrain in particular as a disturbing sign that neighboring Saudi Arabia might not be immune to the spreading political contagion.
Bahrain produces little oil but it is connected to the oil-rich eastern region of Saudi Arabia by a 15-mile-long causeway. The island nation has a majority Shiite population with cultural and religious ties to the Saudi Shiite minority that lives close to some of the richest Saudi oil fields.
Saudi rulers have long feared that its main regional rival, Iran, could try to destabilize Bahrain as a way to cause trouble for the Saudi royal family. Iran’s intentions became all the more worrisome to the Saudis when it decided this month to send two warships through the Suez Canal for the first time in more than 30 years.
“No one knows where this ends,” said Helima L. Croft, a director and senior geopolitical strategist at Barclays Capital. “A couple of weeks ago it was Tunisia and Egypt and it was thought this can be contained to North Africa and the resource-poor Middle East countries. But now with protests in Bahrain, that’s the heart of the Gulf, and its adding to anxieties.”
Middle Eastern oil fields are generally well defended and far from population centers, but energy analysts say the continuing turbulence potentially threatens supply lines and foreign investment that producers like Libya and Algeria depend on to increase production.
Egypt is not an oil exporter but world oil prices started rising when demonstrations overwhelmed downtown Cairo earlier in the month because of concerns that unrest could block the Suez Canal and Sumed pipeline through which three million barrels of crude pass daily. Labor unrest continues to roil the canal, though shipments have continued without incident.
Unrest in Yemen potentially threatens the 18-mile-wide Strait of Bab el-Mandab, a shipping lane between the Horn of Africa and the Middle East that serves as a strategic link between the Indian Ocean and Mediterranean through which nearly four million barrels of oil passes daily. Security for tanker traffic in the area became a concern after terrorists attacked a French tanker off the coast of Yemen in 2002.