Oil falls after Libya calls halt to military action

Oil prices fell on Friday after Libyan leader Muammar Gaddafi’s government said it would halt military action in response to a U.N. resolution for an immediate ceasefire.

Brent crude was trading 69 cents lower at $114.21 by 1352 GMT, off a session high of $117.29 and up from the day’s low of $113.07. U.S. crude shed 57 cents to $100.85.

“We decided on an immediate ceasefire and on an immediate stop to all military operations,” Libyan Foreign Minister Moussa Koussa told reporters.

But France said it remained cautious as the threat on the ground in Libya had not been lifted and Britain said Gaddafi would be judged by his actions rather than his words.

Libya’s response followed a United Nations meeting on Thursday in which the security council authorized Western-led military intervention against Gaddafi who had vowed to crush a rebel uprising in the country.

The U.N. also authorized “all necessary measures” — code for military action — to protect civilians against Gaddafi’s forces.

Oil markets had risen to their highest in more than a week following the U.N. resolution and, although the ceasefire triggered a sell-off, analysts noted the situation was still complex.

“This does not mean we near a resolution of the situation in Libya. We may be facing the possibility of an entrenched status quo between pro and anti Gaddafi groups,” said Harry Tchilinguirian, analyst at BNP Paribas.

“This only maintains the uncertainty in terms of when we will eventually have a full resumption of production in Libya.”

Libya pumped 1.6 million barrels per day (bpd) of sweet, light crude before violent unrest broke out earlier this year.

BAHRAIN, SAUDI

The situation was also still volatile in Bahrain, where earlier this week the authorities cracked down on Shi’ite protesters demanding reform by the Sunni monarchy, drawing criticism from the United States and Iran.

Sunni-ruled ally Saudi Arabia, OPEC’s largest oil producer, has sent troops into Bahrain, together with other forces from the Gulf Cooperation Council (GCC).

As it monitors unrest in its oil-producing east, home to its Shi’ite minority, Saudi Arabia on Friday announced billions of dollars in handouts for its people and boosted its security apparatus.