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Oil price rises on Middle East conflict fears

By early afternoon in Europe, benchmark oil for November delivery was up 75 cents to $90.80 a barrel in electronic trading on the New York Mercantile Exchange.

By PABLO GORONDI
The Associated Press

10/22/2012

Oil prices rose Monday after violence in Lebanon sparked fears of wider unrest in the Middle East.

By early afternoon in Europe, benchmark oil for November delivery was up 75 cents to $90.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.05 to end at $90.05 per barrel on Friday.

In London, Brent crude was up 59 cents to $110.73 on the ICE Futures exchange.

Fears of instability in the Middle East flared anew Friday, when Lebanon's intelligence chief, Brig. Gen. Wissam al-Hassan, was assassinated in a massive car bombing. He was a powerful opponent of Syria, which for decades has wielded political and military influence in Lebanon.

Syria itself has been riven with violence since an uprising against President Bashar Assad began in February 2011.

"At present, we do not expect conflict to spread outside of Syria and Lebanon but the Middle East holds several key oil transit routes — the Suez Canal and Strait of Hormuz," said Edward Bell, commodities analyst at the Economist Intelligence Unit. "Any disruption in passing through these chokepoints would contribute to a momentary upward shift in oil prices."

Brent prices were also supported by the delayed return to production of the Buzzard oil field in the North Sea.

"Buzzard is now in its seventh week of complete shut-in, despite initially having been expected to start up after about five weeks of maintenance and be fully back on stream around the middle of October," said a report from KBC Energy Economics in London.

In other energy futures trading in New York:

- Heating oil rose 0.55 cent to $3.1231 per gallon.

- Wholesale gasoline added 1.05 cents to $2.6826 per gallon.

- Natural gas was up 2 cents at $3.637 per 1,000 cubic feet.

Pamela Sampson in Bangkok contributed to this report.