Oil slides after quake, tsunami slam Japan

(Updates prices)

By Ikuko Kurahone

LONDON, March 11 (Reuters) - Oil slid by on Friday, with U.S. crude falling below $100, after an earthquake rocked Japan, created a 10-metre tsunami and shut down dozens of plants in the world's third-largest oil consumer.

The oil market was also keeping an eye on a planned day of demonstrations in Saudi Arabia, the world's top oil exporter, and violence in Libya, which has disrupted its oil exports.

U.S. crude fell to as low as $99.01 a barrel and was trading at $100.44 a by 1544 GMT. ICE Brent crude fell $1.40 to $114.07 a barrel. It has fallen from a 2-1/2-year high of $119.79 on Feb. 24.

Metals and soft commodities also fell.

Japan was hit by a magnitude 8.9 earthquake, the largest since observations began in the late 19th century. About 200-300 bodies were found, said police in Miyagi, northern Japan, where the quakes and the tsunami hit the hardest. The death toll was expected to rise.

"We need to think what the potential impact on Japanese economy from the quake will be and what the impact on global economy will be," Olivier Jakob with Petromatrix said.

"That may weigh on oil demand from Japan and the oil price."

Japan is the third-largest energy consumer after China and the United States and imports almost all its energy needs.

Some refineries and nuclear power plants were shut, and analysts pointed out the shutdowns might increase demand for imports of refined products and fuels for electricity generators.

"Short-term the disruption in activity will be clearly negative for Japanese oil demand, but you may find that post the initial impact of the tsunami, there will be a need to deliver oil products to meet demand if you suffer losses in refinery output," said Harry Tchilinguirian, BNP Paribas' head of commodity markets strategy.

The earthquake triggered a 10-metre tsunami that swept away everything in its path, including houses, cars, ships and farm buildings, and then spread across the Pacific.

The Japanese government declared an emergency at nuclear power plants and evacuated thousands of residents. No radiation leak had been reported so far.

Jakob and Tchilinguirian also pointed out the potential for increased demand for natural gas and fuel oil from power producers to compensate for shutdowns of nuclear capacity.


In the Middle East, police flooded the streets of Saudi Arabia's capital to deter a planned day of demonstrations, while a small Shi'ite demonstrated was reported in Hofuf, in the oil-producing east.

In Libya, forces loyal to Libyan leader Muammar Gaddafi entered the oil port of Ras Lanuf in the east of the country and were fighting for control of the town, rebels said on Friday.

"Looking further forward it would be optimistic to expect Libyan oil production to return to normal levels this year," Lawrence Eagles with J.P. Morgan said in a research note.

Elsewhere in the region, Bahraini police blocked several thousand protestors from reaching the royal palace. In Yemen, tens of thousands of protestors marched in the capital, and protests turned violent in the southern port city of Aden. Kuwaiti riot police fired tear gas to break up a small, peaceful demonstration by stateless Arabs demanding greater rights.

European shares fell to a three-month low after the quake in Japan and on growing unrest in the Arab world.

U.S. retail sales rose 1 percent, the largest gain since October. But it did not reverse the fall in oil prices. (Reporting by Ikuko Kurahone, additional reporting by Alejandro Barbajosa in Singapore; editing by James Jukwey and Jane Baird)