Crude oil prices fell to their lowest in two weeks on Monday with investor concerned about the economic impact from Japan’s catastrophic earthquake and tsunami.
Japan is the world’s third largest consumer of energy and analysts believe demand will fall in the short to medium term as the country’s economic activity is likely to be subdued following devastation caused by the natural disaster.
However the feeling among traders that the unrest in oil rich North Africa and the Middle East would continue provided support for oil prices.
Prices pushed off the lows after Saudi Arabia sent troops into Bahrain on Monday to help put down weeks of protests by the Shi’ite Muslim majority, a move opponents of the Sunni ruling family there called a declaration of war.
Bahrain, an island off the coast of Saudi Arabia, called in forces from its Sunni neighbours to quell the unrest after protesters overwhelmed police and blocked roads in a resurgence of mass protests seen last month.
With regard to Japan, prices for refined oil products and gas have picked up due to an expected increase in import demand in the near future from Japan to cover lost oil refining and nuclear power generation capacity.