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Oil prices rose dramatically on Monday after a major Alaskan oil field shut down operations, halving the total output of oil from Alaska. Coming on top of the ongoing violence in the Middle East, the price of Light, sweet crude for September delivery rose by $1.23 to US$75.99 a barrel in early afternoon Asian trading at the New York Mercantile Exchange.
London brent crude peaked at $77.73/barrael.
The shutdown of the Prudhoe Bay oil field "caught traders by surprise", says Victor Shum, an energy analyst in Singapore. "The Middle East violence is a threat to the oil supply, but Alaska is a real disruption".
The oil field began shutdown procedures on Sunday due to severe corrosion and a minor leakage from an oil transit line. The total shutdown process is expected to take a few more days. BP Exploration Alaska, Inc, the company running the field, has said that oil production will be reduced by 400,000 barrels per day, or nearly 8% of the total U.S. oil production.
BP officials do not know how long the field will stay offline.
Oil prices rise after Alaskan field shuts down