Oil prices rise amidst uncertainty over Libyan crude exports

Darnell Taylor
June 30, 2018

These output losses follow a move by the Organization of the Petroleum Exporting Countries and other oil producers last week to increase supply by around 1 million barrels per day (bpd).

Crude prices neared the highest close in 3-1/2 years on Wednesday over threats to global supply and sharply depleted US stocks.

With band-aid solutions in place, the road to $140 could be on again even as global oil markets continue to rebalance nicely, with the latest International Energy Agency (IEA) oil market report showing OECD oil storage officially below the five-year average by 1 million barrels. Domestic oil use surges during summer months as the kingdom burns crude to generate electricity for air conditioning.

Saudi Arabia is under pressure from the White House to pump more crude to alleviate high prices before the US midterm elections in November.

Crude oil prices surged more than 3% Tuesday after the U.S. State Department said it will require companies to cut all oil imports from Iran to zero by November 4.

The announcement comes at a time when Venezuela's production has plummeted with little hope of recovery any time soon, and the market is dealing with short-term supply disruptions from Libya and Canada.

The United States has told all countries to stop importing Iranian oil from November.

West Texas Intermediate, the US benchmark, rose above $70 a barrel for the first time in a month, jumping as much as 3.2 percent.

Angelina Jolie treated like royalty in Queen Elizabeth's absence
She met Queen Elizabeth II in 2014, and her look for that meeting was similarly regal to what she wore to Thursday's London event. On social media, fans couldn't stop gushing over the star's regal aura, from her chic outfit down to her waves to the public.


The president has publicly complained about OPEC policy and rising oil prices on Twitter.

"Fundamentals still remain favorable for oil prices to rise over the next six months", said BNP Paribas senior oil strategist Harry Tchilinguirian. "No good and will not be accepted!"

OPEC's 1 million bpd of new oil into the markets can only be plugged by countries like Saudi and Russian Federation, as most of the member countries are now not in a position to ramp up their output immediately.

Even if Opec and Russian Federation compensate for that additional 1.5 million barrel-a-day loss, the market will still be "finely balanced" in 2019, the IEA said.

Prices have reacted only modestly to the prospect of higher OPEC production, partly because supply has tightened significantly since 2017, and partly because it is not clear exactly how much extra oil will come on to the market or when.

He said that Aramco, which now pumps 10 million barrels a day, has the capacity to produce 2 million more.

That poses a significant risk to the security of global energy markets in the event of sudden and unexpected increases in demand or supply, said Goldman's Singer. A second industry source said the boost in output "will go to the market" without giving more details.

The API data showed builds in gasoline and diesel inventories. During the meeting, it was made a decision to boost oil production, however, the volume was not specified.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER