Crude oil prices rally above $70 over doubts of Libyan supply

U.S. benchmark oil futures rallied, topping $70 a barrel for the first time in more than a month. News that the U.S. is pushing for countries to cut Iran oil imports to zero by November, uncertainty surrounding Libya output and doubts over OPEC’s ability to lift output quickly enough to avoid a shortfall all contributed to oil’s gain. August West Texas Intermediate crude  rallied by $2.45, or 3.6%, to settle at $70.53 a barrel on the New York Mercantile Exchange. That was the highest finish for a most-active contract since May 24, according to FactSet data.

Brent sweet crude futures, the international benchmark for oil prices, were at 74.95 dollars per barrel at, up 22 cents, or 0.3 per cent from their last close. The United States West Texas Intermediate (WTI) crude futures were at 68.33 dollars a barrel, up 25 cents, or 0.4 per cent. Traders said prices were mostly driven higher by uncertainty around oil exports by Libya, a member of the Organisation of the Petroleum Exporting Countries (OPEC). Eastern Libyan commander, Khalifa Haftar’s forces have handed control of oil ports to a separate National Oil Corporation (NOC) based in the East of the country. The official state-owned oil company based in the capital

Tripoli, also called NOC, will not be allowed to handle that oil anymore, he said. In comments later confirmed to the Media, Ahmed Mismari, spokesman of Haftar’s Libya National Army (LNA), said on television that no tanker would be allowed to dock at eastern ports without permission. The permission must be from a NOC entity based in the main eastern city, Benghazi.

Oil markets have tightened significantly since 2017 when OPEC and its partners started withholding supply to prop up slumping prices at the time. “Despite the OPEC agreement (last week) we believe that tight supply is likely to drive oil prices higher during 2018,’’ Jason Gammel of U.S. Investment Bank Jefferies said in a note. Oil has been predicted to rise to 100 dollars before the end of this year by an analyst.