Oil prices have risen following the shutdown of two large crude production bases in Libya due to a military blockade.
According to Reuters, Brent crude futures rose by $0.70 to $65.55 a barrel. West Texas Intermediate (WTI) was up by $0.56 at $59.10 a barrel.
The National Oil Corporation (NOC) of Libya said that issues had been caused by forces loyal to the American-Libyan military commander Khalifa Haftar closed a pipeline. This forced the two oilfields in the southwest region of the country to shut.
National Australia Bank Melbourne commodity research head Lachlan Shaw said: “If this sort of disruption endures, it’s meaningful … the market is right to be reacting with a bullish tone.
“It just continues to emphasise, notwithstanding that the world market is clearly in surplus and there are plenty of stocks, the fact is the market still depends on a number of key regions that have heightened geopolitical risk.”
Reuters cited an NOC spokesman as saying that storage tanks will fill within days. They also said that production will slow to 72,000 barrels per day (bpd) if Libyan exports cease for any length of time.
Recently, Libya’s production rate has reached approximately 1.2Mbpd.
Petroleum Association Japan president Takashi Tsukioka said: “WTI will likely keep hovering around $60 per barrel, with the market focusing on US demand and supply of oil and oil products as well as geopolitical risk in the Middle East.”