Global oil prices rose to a five-month high on Monday as the threat of a civil war in Libya added to uncertainties over supply.
The possible disruption in oil supply from Libya — where rebel forces loyal to renegade General Khalifa Haftar based in the eastern part of the country have been advancing west toward the capital, Tripoli — helped push international benchmark Brent futures up 71 cents, or 1%, to $71.05 per barrel. U.S. West Texas Intermediate crude was up $1.27, or 2%, at $64.35.
Those were the highest prices for Brent and WTI since November at $71.16 and $64.39 a barrel, respectively.
“The violence in Libya is captivating the market,” John Kilduff, a partner at Again Capital in New York, told Reuters. “Given the intense efforts of Saudi Arabia and other countries to restrict output, there is a sense that losing the Libyan oil, again, has the makings of a supply crunch.”
To prop up prices, OPEC and allies such as Russia have pledged to withhold around 1.2 million barrels per day of supply from the start of this year. Supply is also under pressure from U.S. sanctions on Venezuela and Iran.
“We’ve seen Venezuelan production fall of a cliff, we’ve seen already inventories against the five-year average move into more bullish levels, so the fact that there might be a lack of Libyan supply to the market is potentially a bit of a shock right now,” Dave Ernsberger, global head of energy at S&P Global Platts, told CNBC.
Libya — which produced 3 miillion bpd of oil in the 1970s — has been struggling to rebuild its energy industry since a 2011 revolution ousted longtime leader Moammar Gadhafi. Production reached 1.28 million bpd in November but slipped to 900,000 bpd in February, according to OPEC.
According to Reuters, “there are still factors that could bring oil prices down later this year.” Among other things, Russian oil output reached a national record high of 11.16 million bpd last year and, in the U.S., crude production reached a global record 12.2 million bpd in late March.