Libya Force Majeure Pushes Up Oil Prices, But Demand Worries Cap Gains
Oil prices rose on Tuesday after Libya declared force majeure on some of its supplies, although an overall rise in OPEC output and slumping Asian markets kept a lid on gains.
Brent crude oil futures LCOc1 were at $77.90 per barrel at 0650 GMT, up 60 cents, or 0.8 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 79 cents, or 1.1 percent, at $74.73.
OPEC’s June output was 32.32 million barrels per day (bpd), a Reuters survey showed on Monday, up 320,000 bpd from May. The June total is the highest since January 2018.
Libya’s National Oil Corporation (NOC) declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in 850,000 bpd of supplies being disrupted. Traders have also been watching U.S. oil production C-OUT-T-EIA, which has surged by 30 percent over the last two years, but analysts said OPEC’s production policy and unplanned supply disruptions were currently the main focus.
“In the near-term, the level of OPEC production – deployment of spare capacity by Saudi Arabia, Iraq, UAE, Kuwait (and ex-OPEC by Russia), and involuntary disruptions in Libya, Venezuela, Iran – are more important drivers of crude prices,” Goldman Sachs said in a note published late on Monday. The UAE’s Abu Dhabi National Oil Co (ADNOC), a major producer within OPEC, said on Tuesday it is able to increase production by several hundred thousand bpd if needed.
Trump directed blame at the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the biggest producer. Asked whether someone was manipulating oil markets, Trump said: “100 percent. OPEC is and they better stop it because we’re protecting those countries, many of those countries.” “OPEC is manipulating, and you know they allowed (a production increase) less than we thought last week. They have to put out another 2 million barrels in my opinion, because we don’t want that happening,” Trump said.
Trump was referring to OPEC’s decision to raise output together with its non-OPEC allies by around 1 million barrels per day, although since then Saudi Arabia has pledged to raise production to a new record.
Saudi Arabia has been pumping around 10 million bpd in recent months and sources close to its oil policy have said it could raise output to 11 million bpd.
Trump’s suggestion means he wants Riyadh to increase production to 12 million bpd – something the kingdom has never done in the past.
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