As the concerns over events in Libya and the wider Middle East/North Africa situation continue to unfold, oil prices have risen further. At one stage, Brent Crude hit $120 a barrel but has since fallen back. Brent Crude is now trading at around $112 and US light sweet at around $104 a barrel.

Part of the reason for the softening of prices is a move by Saudi Arabia, Kuwait, Nigeria and the United Arab Emirates (UAE), all members of the Organisation of Petroleum Exporting Countries (OPEC), to increase supply. In part this is due to a concern over the rise in prices in recent months, and also the fact that capacity is being improved as a result of oil fields being returned to production following routine maintenance. 

Ali Al-Naimi, the Saudi oil minister, is quoted as saying that his country has spare capacity of 3.5 million barrels a day if needed. The country currently produces over 9 million barrels per day. The other OPEC members mentioned have also suggested that they are prepared to increase production to reduce supply concerns and plan to increase output by around 300,000 barrels a day in the coming weeks.

The International Energy Agency (IEA) has said that Libya is now producing around 500,000 barrels per day, a reduction of round 1 million barrels per day compared to pre-crisis levels. The OPEC members are saying that a more stable oil price is desirable given the problems in the Middle East and North Africa, and the fragile state of the global economic recovery.