Oil rises 2% as outages increase in Libya Russian supply concerns

Stacks of a Total Grande Potts oil refinery seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

NEW YORK (Reuters) – Oil prices rose 2 percent on Monday, with Brent crude exceeding $114 a barrel, as a power outage in Libya deepened concern about tight global supply amid the Ukraine crisis.

Adding to supply pressures from sanctions imposed on Russia, Libya’s National Oil Corporation said on Monday that a “painful wave of closures” had begun to hit its facilities and declared a case of force majeure at the El Sharara oil field and other sites.

“With global supplies now tight, the slightest disruption is likely to have a significant impact on prices,” said Jeffrey Haley, an analyst at brokerage OANDA.

International benchmark Brent crude rose $2.40, or 2.2 percent, to $114.10 a barrel by 1:20 pm EST (1720 GMT). The contract rose to $114.84 a barrel, the highest since March 28.

US West Texas Intermediate rose $2.15, or 2%, to $109.10 a barrel. The benchmark crude hit $109.81 a barrel, also the highest since March 28.

Looming deeper losses of supply. Russian production fell 7.5 percent in the first half of April from March, Interfax news agency reported on Friday, and European Union governments said last week that the bloc’s executive body was preparing proposals to ban Russian crude.

Those comments came before an escalation in the Ukraine war. The Ukrainian authorities said that rockets landed in Lviv in the early hours of Monday morning, and explosions rocked other cities, while Russian forces continued to bombard them after declaring their almost complete control of the port of Mariupol. Read more

In a bearish sign for prices, China’s economy slowed in March, sparking first-quarter growth numbers and exacerbating expectations already weakened by COVID-19 restrictions. Read more

Monday’s data also showed that China refined 2% less oil in March than a year earlier, with productivity falling to the lowest level since October, as higher crude prices slashed profit margins and a tight close dented demand. Read more

Oil jumped to its highest level since 2008 in March, with Brent crude rising briefly to $134.

“There’s still some confusion about whether they’re reopening their economy, so we’re getting mixed signals from China and that has led to a lot of volatility this morning,” Price Futures Group analyst Phil Flynn said.

(Covering by Stephanie Kelly in New York). Additional reporting by Alex Lawler in London and Yuka Obayashi in Tokyo; Editing by Jacqueline Wong, Emilia Sithole Mataris, Nick McPhee and Barbara Lewis

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