Oil extends gains as major producers signal production limits

Oil prices rose for a third day in a row on Tuesday as major producers such as Saudi Arabia and the United Arab Emirates seem unlikely to be able to increase production significantly, while political turmoil in Libya and Ecuador heightened supply concerns.

The price of US West Texas Intermediate crude rose 1.8 dollars a barrel, or 1.6 percent, to 111.36 dollars a barrel by 0644 GMT, adding to the 1.8 percent gains it made in the previous session.

Brent crude futures jumped $1.9 a barrel, or 1.7 percent, to $116.99 a barrel, after an increase of 1.7 percent in the previous session.

Experts also warned that political turmoil in Ecuador and Libya may further tighten supplies.

Libya’s National Oil Corporation said on Monday it may declare a state of force majeure in the Gulf of Siirt within the next three days unless production and shipping at oil terminals are resumed.

Ecuador’s Energy Minister said his country may suspend oil production completely within the next two days amid anti-government protests. The country, a former member of OPEC, was producing about 520,000 barrels per day before the protests erupted.

These factors confirm the existence of a lack of supply in the market, which rebounded this week, to counter the recession fears that affected prices during the past two weeks.

The leaders of the Group of Seven are discussing the possibility of setting a cap on the price of Russian oil.