Price of Dubai oil surpasses 100-dollar mark

Dubai crude surpassed the price of 100 U.S. dollars for the first time in 30 months due to pro-democracy demonstrations in the Middle East spreading to oil-producing Libya.

With fears mounting over a double dip recession of the global economy due to the Libyan unrest, world financial markets fell into chaos. As the crisis is expected to be prolonged as staff from major oil companies evacuate Libyan oil fields, Korea will consider whether to elevate the level of oil price risk to the second highest alert next week.

Yoon Jong-won, director-general of the economic policy bureau at the Korean Strategy and Finance Ministry, said, “Oil price hikes could accelerate inflation in emerging economies, including Korea, due to gains in import prices.”

“Chances are high that it could slow the U.S. and EU economies, which have been rebounding,” he said, adding, “Korea will also have to revise policy measures for oil prices again.”

According to the ministry and Korea National Oil Corp. Tuesday, the spot price of Dubai oil, on which Korea relies for 85 percent of its import demand, hit 100.36 dollars per barrel Tuesday, breaking the 100-dollar mark for the first time since Sept. 8, 2008.

North Sea Brent oil also hit its highest price the same day since July 2008, as Libya, a member of the Organization of Petroleum Exporting Countries, is poised to face civil war. This raised fears over oil supply interruptions and caused oil prices to soar.

With fears flaring up over a double-dip recession, major stock markets worldwide tumbled and the values of the U.S. dollar and gold skyrocketed. With Wall Street closed Monday because of Presidents Day, major European stock indexes plunged due to the Libya shock.

Britain’s FTSE 100 fell 1.12 percent, France’s CAC 40 declined 1.44 percent, and Germany’s DAX shed 1.41, with indexes falling more than 1 percent en masse.

Korean stocks also retreated as the benchmark index KOSPI dropped 35.38 points Tuesday (1.76 percent) from Monday to close at 1,969.92, the lowest of the year.

The greenback also rose sharply against the Korean won, rising 9.5 points from Monday to close at 1,127.60 in Seoul. Amid growing preference for safe assets due to political instability in the Middle East, international gold prices, which had remained stable, reached 1,400 dollars per ounce, the highest in seven weeks.

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