(Bloomberg) — Oil jumped as rising tension in the Middle East and North Africa halted output and exports from key OPEC producers Iraq and Libya.
Futures in New York and London rose more than 1.5%. Iraq temporarily stopped output at an oil field on Sunday and supply from a second site is at risk as widespread unrest escalates in OPEC’s second-biggest producer. In Libya, National Oil Corp. declared force majeure after Commander Khalifa Haftar blocked exports at ports under his control.
While political unrest has simmered in Libya as competing forces tussle for control of the country, the spotlight is back on Iraq after tension earlier this month between Iran and the U.S. led to speculation the conflict may spillover and entangle the OPEC producer. Iraqi supplies are “potentially vulnerable” amid rising political risks in the country and the broader region, the International Energy Agency said last week.
The halt in Libya, compounded by a temporary outage in Iraq and rising fears of wider unrest in OPEC’s no. 2 producer, have lifted oil prices in early Monday trade, Stephen Innes, Asia Pacific market strategist at AxiTrader, said in a note. “Still, prices are likely to remain capped, given the market’s reactive nature to fade geopolitical risk quickly.”
See also: The Man Who Cut Libya’s Oil Supply Is Getting Harder to Handle
West Texas Intermediate for February delivery climbed as much as $1.19, or 2%, to $59.73 a barrel on the New York Mercantile Exchange and traded at $59.23 as of 8:37 a.m. Singapore time. The contract fell 0.9% last week.
Brent for March settlement added as much as $1.15, or 1.8%, to $66 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $6.29 premium to WTI for the same month.
–With assistance from James Thornhill and Serene Cheong.
To contact the reporter on this story: Ben Sharples in Hong Kong at [email protected]
To contact the editors responsible for this story: Serene Cheong at [email protected], Aaron Clark
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