Oil prices rebound on conflict in Middle East

After a retreat in the wake of the Japanese earthquake, international raw material prices are rising again due to escalating turmoil in the Middle East.

In Korea, the average gasoline price surged to a record 1,955.79 won (1.73 U.S. dollars) per liter Sunday, rising for the 161st straight day.

According to the Strategy and Finance Ministry and Korea Center for International Finance Sunday, the U.N.-led attack on Libya will lead to setbacks in crude oil supply, putting upward pressure on international oil prices for a considerable time.

The spot price for Dubai crude had dropped to just above 100 dollars after the Japan earthquake on speculation of demand cutback, but rose 4.01 dollars Friday to reach 110.11 dollars per barrel. The price of NYMEX West Texas intermediate for April delivery surged to 101.07 dollars per barrel Friday after plunging to 97.18 dollars Tuesday.

Pro-democracy protests in Bahrain and Yemen are also driving up oil risks. Bahrain has long protected against the spread of Iran-backed Shi’ite forces to Saudi Arabia, but fears are rising that the protests will spread to Saudi Arabia.

The prices of other raw materials have recovered to levels before the Japanese earthquake or have gone up further. The Commodity Research Bureau Index, a key indictator of international raw materials prices, fell to 338.14 Tuesday from 351.88 on the day of the quake.

It then surged for the third straight day Friday to a pre-quake level of 351.15. In particular, the prices of corn, copper and nickel have risen to exceed pre-quake levels while those of aluminum and tin have recovered to pre-quake levels.

Against this backdrop, the prices of Korean oil products supplied to gas stations by oil refineries have risen sharply and are likely to surge further. The average pre-tax gasoline price supplied by oil companies rose 47.2 won (4 cents) to 928 won (82 cents) per liter in the second week of March from a week earlier.

The rate of rise was bigger than 10.8 won (1 cent) in the fourth week of February and 32.9 won (3 cent) in the first week of March.

The average diesel supply price was 1,009.4 won (89 cents) per liter in March’s second week, up 56.9 won (5 cents) from a week earlier.

Oil companies’ supply price is reflected in gas stations after a one-week time lag. Average gasoline prices nationwide are likely to top 2,000 won (1.77 dollars) per liter soon.

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