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Oil prices surge on Libya unrest

Crude oil prices hit a two year high on Monday as oil production in Libya dropped dramatically amid waves of protests in the region.

Protests broke out in the capital Tripoli at the weekend for the first time following days of unrest in Benghazi, the second largest city. Libya, as a member of the OPEC countries, has a far greater potential to impact on global oil supplies than any of the countries affected by the unrest in the Middle East and fears over oil supplies have led to escalating prices.

In London, Brent crude futures were trading on the ICE at $105.74 a barrel at end of day, breaking last week's peak of $104.52 a barrel and reaching the highest price since September 2008.

Libyan leaders seeking to oust the incumbent Gaddafi regime said oil exports would be halted unless authorities stopped violence against protesters.

According to Al Jazeera, Libya's Nafoora oilfield has stopped producing as the staff have gone on strike. Meanwhile, Statoil, the Norwegian oil company, was reported on Monday as saying that it had closed its offices in Tripoli, Royal Dutch Shell is reported to have withdrawn staff from the region and BP said it has suspended preparations for exploratory drilling for oil and gas in western Libya.

Libya, the world's 12th-biggest oil exporter in 2009, producing 1.6 million barrels a day and exports 1.1 million barrels a day. According to the International Energy Agency (IEA). The country has proven oil reserves of 44 billion barrels, the largest in Africa, according to the IEA.