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Oil prices started the new week higher as the escalation of conflict in the Middle East and production cuts in Libya raised concerns about oil supply.
At around 17:00, the price of North Sea Brent crude oil rose 2.7% to $81.17 per barrel. At the same time, US WTI crude oil rose 3.1% to hover around $77.16 per barrel.
A long-awaited missile strike by the Iran-backed Hezbollah movement was apparently largely thwarted by Israel’s preemptive strike on southern Lebanon over the weekend. But ceasefire talks in Cairo on Sunday in Gaza failed to produce an agreement as neither Hamas nor Israel agreed to multiple compromise proposals put forward by mediators, Egyptian security sources said, raising concerns about whether the latest effort to end the decade-long war has any chance of success.
The eastern Libyan government announced today that it would shut down all oil fields and halt production and exports. The Libyan National Oil Corporation, which controls the country’s oil resources, did not confirm the report. However, NOC subsidiary Sirte Oil Company has announced that it will begin to partially cut production.
“The biggest risk to the oil market due to political tensions in Libya could be a further drop in Libya’s oil production, with production potentially falling from the current 1 million barrels per day to zero.” Investors were also cautious as they awaited the next move from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, following a Reuters report that it plans to start increasing production this year, said Giovanni Staunovo, an analyst at UBS.
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