The upheaval in North Africa and Middle East may not actually travel to other countries but its adverse affects have already reached every nook and corner of the world. It is going to hit hard every economy but will be nightmarish for poorer economies and poor segments of all societies. Pakistan’s fragile economy will be hit even harder where political compulsions keep the government from taking difficult decisions. The surge in oil prices will push the prices upward which will life of ordinary citizen even more difficult. As predicted in these page, the Libyan turmoil has finally started showing its teeth and taking its toll; the world economies are at the brink of yet another crisis as oil surges to almost $120 a barrel and the safe-haven Swiss franc hit a record high on Thursday on fears that turmoil in Libya could spread.US equity markets also hovered near break-even after this week’s sharp slide. Analysts said it was too soon to say a long-expected sell-off on Wall Street was over with unrest in North Africa and the Middle East still alive. The escalating violence in Libya, home to Africa’s largest proven oil reserves, lifted benchmark Brent crude oil to its highest level since August 2008 and kindled concerns of an inflationary spike that might stall global recovery.
This week’s relentless surge in oil prices stung the US dollar against major currencies. The Swiss franc benefited from the turmoil in North Africa while the euro extended gains against the dollar on expectations interest rates in the euro zone will rise earlier than those in the United States. The dollar fell to a record low of 0.9240 of a Swiss franc on electronic trading platform EBS.
Copper, considered a harbinger of economic sentiment, firmed after better than expected US jobless data, but it remained under pressure on concerns that higher oil prices driven by violence in Libya could slow economic growth. Brent crude futures for April delivery spiked to $119.79 a barrel before easing to $114.55, up $3.30 on the day. US light sweet crude oil also rose but remained under the $100 mark it touched on Wednesday for the first time since October 2008. Spot gold prices rose slightly to $1,412.00 an ounce, up just $2.05.
The Financial Times quoted an unnamed official as saying Saudi Arabia was in active talks with European refiners who may be hit by a disruption in Libyan exports. Forces loyal to Muammar Gaddafi launched a counter-attack but rebels threatened the Libyan leader’s grip on power by seizing important towns close to the capital and bringing the tide of rebellion ever closer to his power base. Disruption to Libya’s output has cut at least 400,000 of the country’s 1.6 million barrels per day production, Reuters calculations show. Italian oil company, ENI said the decline was greater, estimating 1.2 million barrels of oil had been removed from the market.
Pakistan stock market also lost hope in domestic political stability amid rumors of Punjab government split and Karachi Stock Exchange (KSE) on Friday tumbled by more than 3.5 percent on foreign selling and political uncertainty. There was panic selling in the market. As reported by Business Recorder. Foreign investors sold because of the global sell-off, political un-certainty and the rise in international oil prices. KSE benchmark 100-share index was 3.59 percent, or 405.24 points, lower at 11,134.02 on turnover of 104.86 million shares by 3:32 p.m.