Oil prices rose 2 per cent on Monday, with Brent crude topping $114 a barrel, as outages in Libya deepened concern over tight global supply amid the Ukraine crisis.
Adding to supply pressures from sanctions on Russia, Libya’s National Oil Corp on Monday said “a painful wave of closures” had begun hitting its facilities and declared force majeure at Al-Sharara oil field and other sites.
“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said Jeffrey Halley, analyst at brokerage OANDA.
Brent crude, the global benchmark, rose $2.40, or 2.2 per cent, to $114.10 a barrel by 1:20 p.m. EDT (1720 GMT). The contract rose to $114.84 a barrel, its highest since March 28.
U.S. West Texas Intermediate rose $2.15, or 2 per cent, to $109.10 a barrel. The benchmark hit $109.81 a barrel, also the highest since March 28.
Deeper supply losses loom. Russian production declined by 7.5 per cent in the first half of April from March, Interfax reported on Friday, and EU governments said last week the bloc’s executive was drafting proposals to ban Russian crude.
Those comments came before an escalation in the Ukraine war. Ukrainian authorities said missiles struck Lviv early on Monday and explosions rocked other cities as Russian forces kept up their bombardments after claiming near full control of the port of Mariupol.
In a bearish signal for prices, China’s economy slowed in March, taking the shine off first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs.
Data on Monday also showed China refined 2 per cent less oil in March than a year earlier, with throughput falling to the lowest since October as the surge in crude prices squeezed margins and tight lockdowns reduced demand.
Oil surged to the highest since 2008 in March, with Brent briefly topping $134.
“There’s still some confusion about whether they’re reopening their economy, so we’re getting mixed signals out of China and that has presented a lot of volatility this morning,” Price Futures Group analyst Phil Flynn said.
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