Oil prices rose today as violence in Libya escalated when heavily armed gunmen entered Libya’s parliament and demanded the suspension of activities, which raised concerns over oil supply disruption.
Brent crude rose by 23 cents to $109.98 a barrel, while US oil increased by 15 cents to settle at $102.17, reported Reuters.
Crude prices increased after the news that armed groups attacked Libya’s interim parliament and an airbase in the east, as a colonel claiming to speak on behalf of the army declared that parliament had been suspended.
Libyan output dropped to approximately 200,000bpd from 300,000bpd earlier last week and remains far below the 1.4 million barrels per day produced last year.
Oil prices also gained support from the conflict in Ukraine when US President Barack Obama spoke with French President Francois Hollande about the situation on Friday, the two agreeing that Russia faces significant further costs if it continues provocative and destabilising behaviour.
Russian Energy Minister Alexander Novak said that the country is ready to discuss a gas price discount for Ukraine if Kiev pays off the $2.2bn it owed as of 1 April.
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A warning was also given by Russia that it will not supply Ukraine with gas in June unless Kiev pays in advance by 2 June, which increased fears that deliveries to Europe could be affected and shortage of natural gas could prop up demand for substitute fuels such as oil.
The International Energy Agency said last week that the Organisation of the Petroleum Exporting Countries (OPEC) needs to pump more oil in 2014 to reach its target of 30 million barrels per day.
Image: Libyan oil output dropped to 200,000bpd, from 300,000bpd last week. Photo: courtesy of Freedigitalphotos.net/Dan.