Adedapo Adesanya
By Adedapo Adesanya
Oil prices climbed on Tuesday as the Middle East crisis and a Libyan supply outage boosted the outcome, with Brent crude futures going up by $1.47 or 1.9 per cent to $77.59 a barrel, and the US West Texas Intermediate crude (WTI) appreciating by $1.47 or 2.1 per cent to $72.24 per barrel.
Prices drew support from the closure of Libya’s 300,000 barrels per day Sharara oilfield, one of its largest, which has been a frequent target for local and broader political protests, and Middle East tensions.
Libya’s National Oil Corporation (NOC) has since declared a force majeure with immediate effect at the oilfield.
The African country’s oil output has been disrupted repeatedly in the chaotic decade since the 2011 NATO-backed uprising against its former leader Muammar Gaddafi.
NOC said in a statement that the Sharara closure has suspended crude oil supplies from the field to the Zawiya terminal.
Meanwhile, Israel has said its fight against Hamas would continue through 2024, stoking concerns the conflict could escalate into a regional crisis that disrupts oil supplies.
Also, some major shipping companies are still avoiding the Red Sea following attacks by Iran-aligned Houthi militants in response to Israel’s war against Hamas.
However, the impact on oil tanker movements has been less than expected.
On Monday, Brent and WTI posted around 4 per cent losses respectively after sharp cuts to Saudi Arabia’s official selling prices (OSP), prompting both supply and demand concerns.
However, oil futures were also supported on Tuesday after Saudi Arabia emphasized its desire to support efforts to stabilise oil markets and following reports that Russia curbed its crude oil production level in December.
In the US, the world’s largest oil producer, the Energy Information Administration (EIA) said crude production will hit record highs over the next two years but grow at a slower rate, as efficiency gains offset a decline in rig activity.
It said output will rise by 290,000 barrels per day to a record 13.21 million barrels per day this year.
Crude oil inventories in the US fell this week by 5.215 million barrels for the week ending January 5, according to The American Petroleum Institute (API), after analysts predicted a draw of 1.2 million barrels.
The API reported a 7.418 million barrel draw in crude inventories in the week prior.
Government data from the EIA on stockpiles is due later on Wednesday.
