msnbc.com news services
updated 3/11/2011 3:53:20 PM ET 2011-03-11T20:53:20

Oil prices continued to slide Friday, at one point dropping below $100 per barrel for the first time in more than a week, after a massive earthquake spawned a tsunami that slammed into northern Japan.

Japan is the third-largest oil importer in the world. It's unclear how much its economy will be affected by the disaster, yet the news helped slow down what had been a sharp, three-week rally in oil markets.

U.S. crude oil futures closed Friday down $1.54, or 1.5 percent, at $101.16. For the week, oil futures fell $3.26, or 3.12 percent — the biggest weekly percentage loss since the week of Feb. 11.

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Oil prices have surged 24 percent since the middle of February, crossing the $100 mark as uprisings in Libya forced much of the country's oil production to shut down. The wave of pro-reform protests across North Africa and the Middle East have rattled energy markets, and many oil traders fretted about unrest spreading to Saudi Arabia. Rallies planned in that country for Friday appeared to draw small crowds, and none in the capital, as Saudi rulers deployed hundreds of police and blocked roads. Officials also beefed up security around the country's oil fields.

"This is a market that's ripe for a correction," analyst and trader Stephen Schork said. "Everyone was waiting for this 'Day of Rage'" in Saudi Arabia, "but at this point, there aren't any headlines" to suggest that the country's oil fields are in danger.

The tsunami that ravaged Japan hit the coast with a 23-foot wall of water, sweeping away ships, cars and homes. It was unleashed by a magnitude-8.9 offshore quake that was followed for hours by more than 50 aftershocks. Hundreds are believed dead in the coastal city of Sendai.

"Our initial assessment indicates that there has already been enormous damage," Chief Cabinet Secretary Yukio Edano said.

A large fire erupted at the Cosmo oil refinery in the city of Ichihara and burned out of control with 100-foot flames leaping into the sky. Other refineries were shut down as a precaution.

Exxon Mobil Corp. suspended operations at the TonenGeneral Sekiyu Kawasaki Refinery, which the company partially owns, though it doesn't appear to have suffered any damage. TonenGeneral refines 296,000 barrels per day of crude. Royal Dutch Shell also reported no damages to its refineries in Japan or at any of the 3,900 Showa Shell-branded stations in the country.

Tesoro Corp. said its refineries in Hawaii and Alaska were safe, though a few retail stations in Hawaii were closed as a precaution. Halliburton Co. said all of its employees working in the region are OK.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said the tsunami will likely depress oil demand as Japan's economy picks up the pieces, though it's hard to say for how long. Some of Japan's nuclear power plants also may have been damaged, and the country could be forced to import more oil and natural gas.

The oil rally may have cooled this week, but it could turn right back around, Ritterbusch added.

"Libya is still a big deal," he said. As long as the country has no clear leader, world supplies will continue to be under increased pressure. "That's going to continue to drive oil prices."

Meanwhile gasoline prices in the U.S. continue to rise. The national average for regular climbed above $3.54 per gallon on Friday. That's 42.7 cents higher than a month ago and 76.6 cents more than the same time last year, according to AAA, Wright Express and Oil Price Information Service.

The Associated Press contributed to this report.

Explainer: Overview of Libya's oil resources

  • Image: A Libyan oil worker, works at a refinery inside the Brega oil complex
    AP

    OPEC member Libya is the 17th largest producer in the world, third largest producer in Africa and holds the continent's largest crude oil reserves. It normally pumps around 1.6 million bpd, 85 percent of which is exported to Europe and its output is equivalent to about 2 percent of global oil consumption.

  • Libya's place in the oil producing world

    How the country measures up in crude supplies and production.

  • Exports

    Before the war, Libya was a net exporter with domestic consumption estimated at only around 270,000 bpd.

    Europe was most affected by Libyan oil export disruptions. About 28 percent of Libya's oil went to Italy, 10 percent to Germany, 11 percent to China and France and 3 percent to the United States.

    Libyan oil accounted for about 23 percent of Ireland's oil and about 22 percent of Italy's, according to the IEA.

    Around 13 percent went east of the Suez Canal to Asia.

    The shortfall from the loss of Libyan output was covered by alternative sources such as Nigeria and Azerbaijan, which produce similar light crude oils to Libyan oil.

    Saudi Arabia also brought some it its spare capacity online, according to Saudi sources. The kingdom promised to fill any supply gap caused by the unrest in Libya although it produces heavier crude with higher sulfur content than Libya.

  • Infrastructure

    Reuters

    Oil fields
    Most of Libya's oil fields are located in and around the Sirte Basin, in the northeastern part of the country, which contains around 80 percent of the country's proven reserves.

    Other key areas include the Ghadames Basin, about 240 miles south of Tripoli and Cyrenaica Basin in the northeast and the Murzuq oil field in the desert in the south of the country.

    Libya has five domestic refineries with a combined capacity of 378,000 barrels a day:

    Azzawiya Oil Refining Co
    Sarir Refining
    Sirte Oil Co
    Tobruk Refining
    Ras Lanuf Oil & Gas Processing Co

    Ports
    Libya exported various grades of light crude from six major terminals, five of which are located in the eastern part of the country, where protests erupted near the second city of Benghazi.

    Following are the eastern terminals with pre-war loading volumes in January, 2011 provided by the IEA.

    Es Sider 447,000 barrels per day
    Marsa El Brega 51,000 bpd
    Ras Lanuf 195,000 bpd
    Tobruk 51,000 bpd
    Zueitina 214,000 bpd
    Zawiyah 199,000 bpd (January exports)
    Oother unspecified terminals 333,000 bpd

  • Companies

    Image: Libyan oil worker, works at a refinery inside the Brega oil complex
    AP

    Libya's state company
    Under the Gaddafi regime, Libya’s oil industry was run by the state-owned National Oil Corporation (NOC), which was responsible for managing exploration and production sharing agreements with international oil companies. Along with smaller subsidiary companies, the NOC accounted for around 50 percent of the country's oil output.

    Foreign players
    Major oil companies operating in Libya include:

    BP (Great Britain)
    ConocoPhillips (United States)
    Eni (Italy)
    ExxonMobil (United States)
    Hess Corp (United States)
    Marathon (United States)
    Occidental Petroleum (United States)
    OMV (Austria)
    Repsol (Spain)
    Shell (United States)
    Statoil (Norway)
    Wintershall, a unit of BASF (Germany)

Photos: Gas Turmoil

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