An employee of a petrol station refills a car in Tripoli yesterday. Libya is importing more fuel to make up for local shortages caused by strikes and shutdowns at oilfields and ports, officials said yesterday.
LONDON: Brent crude oil rose above $110 a barrel yesterday as supply concerns resurfaced after Libya failed to reach a deal with tribal leaders to end a blockade of several oil-exporting ports.
The closure of the Libyan oil ports is preventing export of several hundred thousand barrels per day (bpd) of high quality, light crude, tightening an oil market that might otherwise be fairly well supplied.
Brent futures for January rose $1.97 a barrel to a high of $110.80 before easing to around $110.25 by 1300 GMT, up $1.42. The contract lost 2.5 percent last week.
US crude futures rose 70 cents to $97.30 after ending 90 cents lower on Friday, down 1 percent for the week.
Libyan port blockages, along with strikes by oil workers, civil servants, tribesmen and other protesters at oilfields across the desert country, have cut its oil exports to around 110,000 bpd from more than 1 million in July.
“This means that approximately 600,000 bpd of potential exports will remain off the market,” JBC Energy Managing Director David Wech said.
Analysts worry that Libya is sliding into chaos as the government struggles to rein in militias and tribesmen who helped topple Muammar Gaddafi in 2011 but kept their weapons and control parts of the Opec-member country.
“This latest disappointment only reinforces our view that Libyan production will struggle to exceed 800,000 bpd in 2014,” Morgan Stanley oil analyst Adam Longson said.
“Resolving deep disagreements will likely require material changes at the federal level, and threats by the government to use force only risk exacerbating the situation.”
Investors awaited a US Federal Reserve decision on how soon to end its monetary stimulus, which has helped drive investment in global commodities.
The US Central Bank meets today and tomorrow to discuss the gradual tapering of its stimulus programme and opinion is divided on whether it will move this week or wait for early next year.
A cut in its stimulus would boost the dollar, weighing on most commodities, including oil.
“Markets were initially expecting tapering to be announced in March 2014 but with increased prospects of an earlier tapering, markets will continue to be jittery,” analysts at Phillip Futures said in a note.
Data yesterday showed China’s factory sector expanded for a fifth straight month, but the reading in December slowed to a three-month low. Reuters
