Oil prices fell today as the Arab League said a peace plan for Libya was under consideration.
Brent crude futures fell more than $3 a barrel to an intraday low of $113.09 after the head of the Arab League said a peace plan for Libya, proposed by Venezuela’s Hugo Chavez, was being contemplated.
However, Brent quickly retraced some of the losses to stand at $114.67, down 1.4 percent on the day.
US crude fell 1.2 percent to $101, after hitting a high of $102.94.
"We have been informed of president Chavez's plan but it is still under consideration," Amr Moussa, the secretary-general of the Arab League said.
"We consulted several leaders yesterday," he said, without providing a deadline to decide on the plan. He said he did not know if Muammar Gadafy had accepted the plan.
Oil investors are concerned that growing instability in Middle East oil producers if public protests against incumbent leaders spread, could threaten global supplies.
Bank of America Merrill Lynch analysts argue the oil shock from Libya ranks as the eighth largest supply shock since 1950. "The stability of the region has gone through a major shock and the ripples are going to be felt for a while," said Carl Larry, president of Oil Outlooks and Opinions based in Houston.
Reuters
