By Adedapo Adesanya
The crude oil benchmarks fell more than one per cent a barrel on Friday amid disruptions in Nigeria and Libya after Shell suspended loadings of Nigeria’s Forcados crude oil owing to a potential leak at a terminal.
Exports of the grade, which was scheduled to ship 220,000 barrels per day in July, were halted on Wednesday evening after workers saw fumes near the single buoy mooring that was loading oil onto a vessel.
Also, several oilfields in Libya were shut down on Thursday because of a local tribe’s protest against the kidnapping of a former minister.
Production at Libya’s El Feel, Sharara and 108 oilfields was shut in protest by the Al-Zawi tribe against the kidnapping of Mr Faraj Bumatari, a former finance minister.
The protesters released a video statement from the 108 oilfields, saying while they closed a valve, “We affirm the continuation of the oil closures, and we may escalate the situation to more than that if our son, Faraj Bumatari, is not released.”
The Libya disruption is halting an estimated 370,000 barrels per day, while the loss from the Nigerian outage is pegged at 225,000 barrels per day, according to market analysts.
These developments resulted in the price of Brent crude declining by $1.49 or 1.8 per cent to $79.87 per barrel, as the US West Texas Intermediate (WTI) crude fell by $1.47 or 1.9 per cent to settle at $75.42 a barrel, though both gained nearly 2 per cent this week.
Since the end of August 2022, Libya has been pumping close to or even above 1.2 million barrels per day after the recent crisis. The North African country is exempted from the agreement of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) because of its volatile security situation in recent years.
Russian oil exports have also decreased significantly, and if this trend continues next week, it will probably drive prices up further since Russian oil exports are set to be reduced by 500,000 barrels per day in August.
Meanwhile, support also came as the Dollar strengthened and oil traders booked profits from a strong rally, with crude benchmarks recording their third-straight weekly gain.
The US Dollar index edged higher after hitting a 15-month low during the session as investors consolidated ahead of the weekend.
A stronger greenback usually reduces oil demand, making crude more expensive for investors holding other currencies.
Next week, however, the rally could resume as easing inflation, plans to refill the US strategic reserve, supply cuts and disruptions could support the market.
Modupe Gbadeyanka