Oil price hits two and a half year high

The oil price has hit its highest level since the financial crisis, amid continuing supply fears over the conflict in Libya and renewed optimism about global economic growth. US crude rose to $108.74 on Monday morning, its highest level since September 2008.

The cost of a barrel of Brent crude, sourced from the North Sea, hit $119.54 on Monday. This left Brent just 25 cents away from its two-and-a-half year high reached on 24 February when the revolt against Libyan leader Muammar Gaddafi was gathering pace.

The oil price has been driven higher in recent weeks by the repeated refusal of Iran, which currently chairs the Opec group of oil-producing nations, to support an increase in production. Last Friday, Iranian oil minister Massoud Mirkazemi said there was "no need" for an emergency meeting, where an output hike could be agreed.

Oil also rose on the back of a rally in Asian stock markets where shares rose to their highest in nearly three years, reacting in part to strong US jobs figures put out on Friday.

The MSCI Asia Pacific Index, excluding Japan, rose 0.88%, hitting its highest level since May of 2008. The Nikkei also rose, dropping back before the close to finish just 0.1% up.

The rising oil price came as there were suggestions BP could return to its controversial deep-water drilling in the Gulf of Mexico.

US regulators have given the company approval to start work on 10 wells in the Gulf which were halted by a moratorium on drilling imposed after the spill from the Deepwater Horizon rig, according to the Sunday Times.

The oil group has declined to comment on the story, but it did say on Monday that it had agreed to sell Arco Aluminium, a supplier of rolled aluminium sheets used in producing drinks cans, to a Japanese consortium for $680m (£420m) in cash.

Falklands explorer Rockhopper also put out an update on its Sea Lion discovery on Monday, raising its low case estimate of oil reserves found there. It believes there are 155m barrels of recoverable oil in place at Sea Lion.

Source: guardian.co.uk