* As much as 100,000 bpd crude output shut in Libya
* Concern that other big producers could suffer outages
* Top exporter Saudi Arabia sees no need to pump more
* For a 24-hour technical outlook on oil: http://graphics.thomsonreuters.com/WT/20112202084230.jpg
(Updates prices, IEA comments)
By Francis Kan
SINGAPORE, Feb 22 (Reuters) - U.S. crude futures hit a 2-1/2
year high on Tuesday on concern that violence in Libya could cut
more of the OPEC-member's output and that a similar story could
play out in other top oil producers in North Africa and the
Middle East.
As deadly clashes wracked Libya's biggest cities, one
international oil firm shut down as much as 100,000 barrels per
day (bpd) of output, about 6 percent of output in Africa's
third-largest producer.
Other big oil firms said they were withdrawing staff as
Libyan leader Muammar Gaddafi fought to hang on to power and
dozens were reported killed in the capital, Tripoli.
U.S. crude for March delivery , which expires on
Tuesday, touched its highest since October 2008 at $94.49 a
barrel. The contract trimmed gains later to trade at $93.48 a
barrel by 0531 GMT, still up around $2 from late Monday.
Brent crude for April delivery rose $2.01 to $107.75
a barrel, after rising as high as $108.18 in early trade. On
Monday, Brent hit a 2-1/2 year high of $108.70.
"The market is very nervous over news of violence in Libya,
and that's driving prices," said Yinxi Yu, a commodities analyst
with Barclays Capital.
"The situation threatens to blow out in the next few days,
and it looks like the uncertainty in the region is not going to
be resolved anytime soon."
Libyan outages were the first impact on oil supply of a wave
of protests in the world's top oil-producing region that have
buoyed crude prices and toppled leaders in Tunisia and Egypt.
Brent crude has risen more than 13 percent so far this year,
while U.S. crude is up over 2 percent.
More of Libya's 1.6 million bpd of output was under threat
after the leader of the Al-Zuwayya tribe in eastern Libya said
it would cut off exports unless authorities stopped violence
against protesters.
In a move certain to anger Israel and exacerbate market
anxiety over the changing political situation in the region, two
Iranian ships entered the Suez Canal on Tuesday on their way to
the Mediterranean.
Iran appears to be testing the state of affairs in the
Middle East after the fall of Egyptian President Hosni Mubarak.
A longstanding peace treaty with Egypt is crucial to Israel's
regional security.
OPEC
The biggest concern for oil markets would be for supply
disruptions from top oil exporter Saudi Arabia. The kingdom
supplies around 10 percent of the world's oil, but also holds
most of the world's spare capacity.
It is the only producer able to respond quickly with large
volumes of oil to compensate for a serious supply outage.
"There is spare capacity to cover Libya's production if
there is a complete shutdown there, but if the unrest spreads to
other parts of the Middle East, even the current capacity might
not be enough," said Yu.
To date, protests in Saudi have been low key. But majority
Shi'ites in neighbouring Bahrain are protesting against the
Sunni government and there is concern this could spread to the
Shi'ite minority living in Saudi Arabia's oil-producing eastern
province.
International Energy Agency (IEA) chief economist Fatih
Birol said on Tuesday that oil prices were in the danger zone
and could rise further if turmoil continues in the Middle East.
"Oil prices are a serious risk for the global economic
recovery," Birol told reporters on the sidelines of a conference
in Indonesia.
Member states would consider releasing oil from their
emergency stocks if supplies were disrupted as a result of
continuing turmoil in the Middle East, he added.
The IEA is adviser to 28 industrialised nations on energy
policy.
Despite high prices and the threat to Libyan output, Saudi
Arabia said on Monday that oil markets were well supplied.
"We're much more focused on how the market balance is -- is
it sufficiently supplied? And the answer is 'yes, abundantly'",
said Deputy Saudi Oil Minister Prince Abdulaziz bin Salman
Al-Saud. "Therefore, does the situation warrant any kind of
intervention? I don't think so."
As OPEC ministers gathered for a conference of oil producers
and consumers in Riyadh, the prince reiterated the long-held
Saudi view that $70 to $80 was the fair price for oil.
SPREADS, TECHNICALS
U.S. crude prices were also boosted by traders rushing to
cover short positions in the Brent/WTI spread, which had blown
out to a record $16 a barrel last week.
The April spread had narrowed to $10.57 by 0525 GMT, down
$1.97 from the previous close.
U.S. oil will extend its gain to $97.33 per barrel,
as a powerful wave (3) is progressing on the daily chart,
according to Reuters market analyst Wang Tao.
(Additional reporting by Randy Fabi; Editing by Simon Webb)
