Oil prices surge as Libya's eastern govt shuts production
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The news: Crude oil prices surged on Monday due to geopolitical tensions and production disruptions.
The numbers: Brent crude futures climbed over 5% to over USD81.5 per barrel following a halt order in oil production in Libya, where a power struggle between its eastern and western governments intensified.
The NYMEX crude oil index climbed past USD77 a barrel, up USD2.46 or 3.3%, data from Reuters showed.
The context: Libya’s eastern government declared force majeure, ordering all oilfields to close and a halt to production and exports, amidst a dispute over central bank control with the internationally recognised Tripoli-based government.
The country holds the largest known crude reserves in Africa, but its production has been hindered by a decade of political turmoil.
Meanwhile, in the Middle East, the intensifying conflict between Israel and Lebanon’s Hezbollah added to the market jitters.
In Yemen, Houthi rebels attacked a Greek-flagged tanker in the Red Sea, adding to the turmoil affecting global oil markets.
What they said: “These are ‘real’ barrels that could be lost, so that would tighten the physical market for as long as it lasts,” Giovanni Staunovo, a commodity analyst at UBS, told Bloomberg referring to Libya's production.
How long such a disruption could last “is the difficult part to asses,” he said.
