Oil prices soar to their highest level in 3 weeks after Libya shut down its biggest production hub amid political crisis

  • Libya close its biggest oil on the ground amid protests against Libyan Prime Minister Abdul Hamid Dbeibah.
  • The outage is sparking more fears over global supply and Libya’s National Oil Corp has warned of a wave of shutdowns.

Oil prices are facing more turbulence and supply tensions as Libya shut down its largest oil field following protests against Libyan Prime Minister Abdul Hamid Dbeibah.

Brent crude rose 2.5% to $114.55 a barrel, the highest since March, while West Texas Intermediate rose 2.3% to $109.44.

Failures have accumulated Russia supply fears, and Libya’s National Oil Corp (NOC) warned on Monday of a “painful wave of closures” at its facilities. After the protesters entered the Al-Fil grounds, the NOC declared a “force majeure” and suspended production.

“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” OANDA analyst Jeffrey Halley told Reuters.

NOC manages the Al-Fil field with the Italian energy company ENI, and the production center is responsible for approximately 70,000 barrels of oil per day. In March, the field was also temporarily closed due to an armed group entering the area.

The official Libyan news agency reported that protesters said they would halt production “until a government appointed by parliament takes office in the capital.”

The field closure comes as global energy markets Trade on unstable geopolitics, with Russia threatening to cut off supplies to ‘unfriendly’ nations while the US and its allies seek to ban imports of Russian crude amid the Ukraine war.

Russian oil continued to be shipped in April, although shipments were travel much further to find buyers. Other shipments are being sent to Asia and the Mediterranean, Bloomberg reported.

So far, the European Union, very dependent on Russian oil, has decided to ban imports of Russian coal, but has stopped before oil and gas ban immediately. However, EU governments said last week that the bloc was considering a proposed crude oil ban.

Meanwhile, the Ukrainian government has called on the world’s leading energy traders to stop handling russian crude absolutely.

“The fact is that traders and commerce and they are helping Russia get this blood money,” the president’s adviser Volodymyr Zelenskyy told the FT.

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Felix J. Dixon