Oil hits five-month high above $71 on Libyan supply threat

Supply has been volatile since the 2011 uprising against Muammar Qaddafi. Above, an oil facility in the northern Libyan town of Al-Buraqah. (AFP)
Updated 09 April 2019
0

Oil hits five-month high above $71 on Libyan supply threat

  • Supply curbs led by the OPEC have underpinned a more than 30 percent rally this year for Brent crude
  • Libyan oil supply has been volatile since the 2011 uprising against Muammar Qaddafi

LONDON: Oil hit a five-month high above $71 a barrel on Tuesday, supported by concern that violence in Libya could further tighten supply already squeezed by OPEC cuts and US sanctions on Iran and Venezuela.
Supply curbs led by the Organization of the Petroleum Exporting Countries have underpinned a more than 30 percent rally this year for Brent crude, despite downward pressure from fears of an economic slowdown and weaker demand.
Brent, the global benchmark, rose to $71.34 a barrel, the highest since November, and by 0825 GMT was up 14 cents at $71.24.
US crude also hit a November 2018 high of $64.77 and was later up 22 cents at $64.62.
“Libya’s oil production and exports have not been jeopardized but the rise in tension is enough to send oil prices higher,” Tamas Varga of oil broker PVM said.
OPEC member Libya pumps around 1.1 million barrels per day (bpd), just over 1 percent of global oil output. Supply has been volatile since the 2011 uprising against Muammar Qaddafi.
“Concerns over the potential squeezing of supply in Libya following the escalation of violence there are adding fresh impetus,” analysts at JBC Energy wrote.
On Monday, a warplane attacked Tripoli’s only functioning airport as eastern forces advancing on the Libyan capital disregarded international appeals for a truce.
Yet despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude prices from rising even higher, traders said.
Recent increases in US crude inventories have also put a lid on price gains. US crude stocks are forecast to have risen by 2.5 million barrels last week, the third straight weekly addition.
The American Petroleum Institute, an industry group, issues its supply report at 2030 GMT, ahead of Wednesday’s official figures.
Looking ahead, a further rally in prices or downward trend in inventories could prompt OPEC and its partners to reconsider their production-cutting pact when they next meet in June.
Russia, a reluctant participant in the supply cuts, signaled on Monday it wanted to raise output when it meets with OPEC because of falling stockpiles.


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
0

Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.