Global oil prices have touched a new high after Brent crude jumped above $65 a barrel for the first time in two years.
The development comes after Ineos decided to shut down the Forties North Sea pipeline to undertake repairs, curbing supplies from a market that was already tightening due to the OPEC-led production cuts.
Brent crude futures LCOc1, the international benchmark for oil prices, increased by 63 cents, or 1%, to trade at $65.32 a barrel.
US West Texas Intermediate (WTI) crude futures CLc1 climbed 39 cents, or 0.7%, to trade at $58.38 a barrel, according to Reuters.
OANDA futures brokerage senior market analyst Jeffrey Halley was quoted by the news agency as saying: “The pipeline … is a significant component underpinning the Brent benchmark.”
“Brent crude raced higher … as news broke that the North Sea’s Forties Pipeline system would have to be shut down for a ‘number of weeks’ after a hairline crack was found in it.”
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Analysts also attributed the rise in oil prices to support from the consumer side.
According to the news agency, US bank Goldman Sachs said in a note to clients: “Demand growth across the commodity complex is extremely robust. And inventories across the complex have been declining sharply.”
Meanwhile, cheaper WTI is seen as an outcome of rising US oil production, which soared to 9.71 million bpd.
OPEC and other non-OPEC producers agreed to continue production cuts until the end of next year to curb supply glut in the market.