Force Majeure Declared on Oil Exports by Libya Amidst Unrest
Libya had to declare a force majeure on some fuel exports on Tuesday, a clear result of the political unrest within the country against its leader Muammar al-Gaddafi.
"We have been notified that both imports and exports are blocked and that it's a force majeure," according to an oil trader in the Mediterranean, talking about to the ports of Tripoli and Misurata, says Reuters.
A force majeure is a common clause in contracts that frees both parties from liability or obligation when an event or circumstance beyond the control of either party, such as war, riot, crime, or natural disaster, prevents one or both parties from fulfilling their contractual obligations.
Oil prices surged as a result, the highest level in more than two years.
"The world could deal with the loss of Libyan barrels, but the worry is that it won't stop at Libya," said Bill O'Grady, chief market strategist at Confluence Investment Management in St Louis to Bloomberg.
"We don't know where this is going to end."