Oil prices surged more than $1 per barrel on Wednesday, as rumors of an interruption at Libya’s main oilfield added to supply fears stemming from Red Sea hostilities.
By 1450 GMT, Brent oil was up $1.34, or 1.8%, to $77.23 per barrel, while West Texas Intermediate crude futures were up $1.29, or 1.8%, to $71.67 per barrel.
According to two engineers, protests have prompted a partial cut in output at Libya’s 300,000-bpd Sharara oilfield.
“The Sharara shutdown certainly adds to pricing upside, especially for Brent,” said Viktor Katona of Kpler, who believes the interruption would be brief.
Oil prices rose approximately $2 earlier this week following Houthi rebels’ raids on boats in the Red Sea.
On Wednesday, the Iran-backed Yemeni militia announced it had “targeted” a cargo ship destined for Israel, a day after the US Central Command (CENTCOM) reported the Houthis had fired two anti-ship ballistic missiles in the southern Red Sea.
Israeli soldiers increased their shelling of the Gaza Strip on Wednesday as the battle spilled over into Lebanon with the assassination of Hamas’ deputy commander in Beirut.
A more significant confrontation may shut down vital oil transit channels and disrupt trade routes.
Both oil benchmarks fell more than 1% on Tuesday as expectations over an early and aggressive interest rate reduction in the United States faded ahead of the release of Federal Reserve meeting minutes and employment data on Wednesday.
Meanwhile, predictions of abundant oil supply in the first half of 2024 have kept prices in check ahead of OPEC+’s Joint Ministerial Monitoring Committee (JMMC) meeting in early February.
According to three coalition sources, no specific date has been set.
According to OANDA analyst Craig Erlam, the market’s attention will shift to the demand side and whether central banks can deliver the gentle landing they have hoped for.
“Any outperformance for the global economy would ease the burden on OPEC+ at a time when compliance with quotas looks like it’s going to be a struggle,” he added.
After weekly oil and product inventory releases in the United States, Reuters surveyed experts who predicted crude inventories would fall last week but distillate and gasoline stocks would rise.
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