U.S. crude rises to highest close in 2-1/2 years

Brent crude oil surged more than 3 per cent to push above $116 (U.S.) a barrel Tuesday as supply disruptions and more turmoil in the Middle East and North Africa kept investors on edge.

U.S. crude rose more than 2 per cent and settled above $99 a barrel as a Reuters report that human rights activists said Saudi authorities had detained a Shi’ite cleric fueled fears of sectarian conflict in the world’s top oil exporter.

Clashes between anti-government protesters and Iran’s security forces in Tehran reported by pro-reform websites added to investor concerns about unrest and its effect on the flow of oil supplies in the region.

“The Saudis had seemed to be walking the tightrope and avoiding problems, but the cleric story had people worried that it signaled problems there,” said Robert Yawger, senior vice-president, energy futures at MF Global in New York.

Brent crude futures for April rose $3.62 to settle at $115.42 a barrel, the highest finish since front-month Brent closed at $116.22 on Aug. 27, 2008. Brent’s intraday peak was $116.32, hit post-settlement.

U.S. crude rose $2.66 to settle at $99.63 a barrel, the highest close since front-month crude ended at $100.64 on Sept. 30, 2008.

Brent’s premium to its U.S. counterpart was above $15 a barrel, up more than 80 cents intraday, after last week’s record $16.91. Brent’s price rise has been stronger because Europe is more vulnerable to supply disruptions from Libya and the region.