Oil giant BP is suspending operations in Libya as the escalating violence pushed the price of oil to new two-year highs.
The British company said 40 expatriate staff and their families, mostly based in the capital, Tripoli, are being evacuated as it temporarily shuts down work on preparations to drill in the Libyan desert.
The ongoing turmoil in Libya – a key global oil producing region – pushed the price of Brent crude oil to $105.3 US (£64.8) a barrel as analysts warned further price hikes could follow if the crisis spreads to Saudi Arabia.
Rebecca Seabury, an analyst at energy consultant Inenco, said: “The market will be most concerned over the protests spilling into Saudi Arabia – so far we have only seen small protests there.
“However, as Saudi Arabia is the world’s largest oil exporter, if the situation escalates this could take oil prices into the complete unknown and even higher than the $147 US (£90.7) a barrel we saw in 2008.”
BP has halted operations in the North African county just four years after it returned from a 30-year hiatus.
The oil giant signed a deal worth at least $900million US (£550million) in 2007 to explore in Libya.
It said it would monitor the situation on a daily basis and could not confirm when work would start again, but stressed that offshore operations in the region were open and the closure would not impact oil production.
BP hailed Libya as being “on the verge of making a return to the international arena” when it signed its exploration deal in 2007.
The agreement, finalised in the presence of then prime minister Tony Blair, gave BP the rights to explore 21,000 square miles – both onshore near the historic desert city of Ghadames, and offshore in the Gulf of Sirt.
It sparked significant controversy on both sides of the Atlantic and led to US claims that BP lobbied the UK Government for the release of the Lockerbie bomber, Abdelbaset Ali al Megrahi.
BP had not operated in Libya for 30 years, as the country’s links to global terrorism led to strict sanctions being imposed by the UN.
Yesterday’s announcement comes as some estimates suggest more than 200 people have been killed in a crackdown in Libya on protests against Colonel Muammar Gaddafi’s 42-year rule, inspired by the uprisings in neighbouring Egypt and Tunisia.
A spokeswoman for the firm said: “We’re monitoring the situation and making preparations to evacuate some families and non-essential staff.”
The leader of the Al-Zuwayya tribe in eastern Libya threatened yesterday to cut oil exports to Western countries within 24 hours unless authorities stop what he called the “oppression of protesters”.
Rising crude prices could drive up the cost of fuel on British forecourts, which are already at highs of around 128.8p per litre for unleaded petrol.
