Oil Advances to One-Week High as Unrest Hits Iraq and Libya

20 Jan by Vitaliy Dadalyan

Oil Advances to One-Week High as Unrest Hits Iraq and Libya

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Oil Advances to One-Week High as Unrest Hits Iraq and Libya(Bloomberg) — Oil rose to a more than one-week high in London as supply disruptions in Iraq and Libya reignited concerns over the market’s vulnerability to geopolitical risk in key production regions.Brent futures increased to more than $65 a barrel after Libya’s oil production almost ground to a halt as armed forces closed a critical pipeline, shuttering output from the nation’s biggest oil project. In fellow OPEC nation Iraq, escalating protests stopped work at a minor field on Sunday.The latest incidents mark the second time this month that the market has been jolted by supply fears in OPEC nations, coming within weeks of a tense exchange between the U.S. and Iran that imperiled the region’s energy exports.While the dramas have roiled markets, with Brent swinging between a trading range of $8 a barrel, prices are now little changed with the end of last year. Supplies are continuing uninterrupted, and traders remain reassured by what the International Energy Agency calls a “solid base” of plentiful inventories and surging American shale-oil production.“The amount of oil which is off is substantial, but right now the expectations are that it’s not going to last because it’s part of a negotiation process,” said Olivier Jakob, managing director at consultant Petromatrix GmbH in Zug, Switzerland. “We are in this situation where you have some supply concerns if one looks at protests in Iraq and the situation in Libya, but on the other hand the products are weak.”Brent crude traded 35 cents higher at $65.20 a barrel on the ICE Futures Europe exchange as of 10:41 a.m. in London, having earlier climbed 1.8% to $66, the highest since Jan. 9. West Texas Intermediate futures rose 21 cents to $58.75 a barrel on the New York Mercantile Exchange.See also: The Man Who Cut Libya’s Oil Supply Is Getting Harder to HandleLibya’s oil production will collapse to just 72,000 barrels per day once its storage tanks are full, according to state-run National Oil Corp., down from more than 1.2 million barrels per day on Saturday. That would be the lowest level since August 2011, data compiled by Bloomberg show.The output plunge started when an eastern military commander, Khalifa Haftar, blocked exports at ports under his control, according to a statement on Saturday from NOC. The company declared force majeure, which can allow Libya — home to Africa’s largest-proven oil reserves — to legally suspend delivery contracts.Separately, security guards in Iraq seeking permanent employment contracts blocked access to the Al Ahdab oil field, prompting a production halt, according to an official who declined to be identified. The Badra field, which has an output of about 50,000 barrels a day, is also at risk of closure.See also: Iraq Oil Supplies Vulnerable as Mideast Tensions Flare, IEA Says\–With assistance from James Thornhill, Serene Cheong, Andrew Janes, Saket Sundria and Heesu Lee.To contact the reporters on this story: Grant Smith in London at [email protected];Alex Longley in London at [email protected] contact the editors responsible for this story: James Herron at [email protected], Christopher Sell, Helen RobertsonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.