Force majeure declaration by Libya lifts oil prices

London — Oil prices rose on Tuesday after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lifted US crude to levels not seen since late 2014.

US light crude jumped 90 US cents, or 1.2%, to $74.84 a barrel, its highest since November 2014, before easing back to $74.59, up 65c, by 8.10am GMT.

Benchmark Brent crude oil was up 45c at $77.75.

Production at Syncrude Canada’s 360,000 barrels per day oil sands facility near Fort McMurray, Alberta, was hit by a power outage in June and is likely to remain offline throughout July, helping drain US inventories.

A Reuters survey estimated US crude oil stockpiles fell for a fourth consecutive week, by about 3.3-million barrels, in the week ended June 29.

Stocks of petrol and middle distillates such as heating oil and diesel fuel also drew, the survey showed.

Libya’s National Oil Corp declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in 850,000 barrels per day of supplies being disrupted.

“Oil bulls seem to have returned after Libya suspended oil exports from two key ports,” said Hussein Sayed, chief market strategist at futures brokerage FXTM.

“If Libya’s oil doesn’t return fast to the market it will be an important test to Opec’s spare capacity, especially given that output from Venezuela and Iran is expected to fall significantly in the next couple of months,” he added.

Oil cartel Opec pumped 32.32-million barrels per day in June, a Reuters survey showed, up 320,000 barrels per day from May. The June total is the highest since January 2018.

The United Arab Emirates’ Abu Dhabi National Oil Company said on Tuesday that it could increase production by several hundred thousand barrels per day if needed.

Oil prices have been buoyed by tightening supplies in 2018 but there are signs demand may now be easing.

In Asia, the world’s top oil consuming region, seaborne oil imports have been falling since May, as higher costs turned off consumers and as the escalating trade dispute between the US and China started to affect the economy.

Chinese stocks fell sharply on Tuesday, with equity markets in Asia near nine-month lows as investors feared the Sino-US trade row could derail a rare period of synchronised global growth.

Reuters