Business News Asia
Crude oil futures closed higher on Monday (April 18) following reports that Libya’s national oil company announced a suspension of production due to labor protests and political unrest. The news sparked concerns about the tense situation in the global market.
- WTI crude futures rose $1.26, or 1.2%, at $108.21 a barrel.
- BRENT crude futures rose $1.46, or 1.3%, at $113.16 a barrel.
Crude oil futures rose after Libya’s National Oil Corporation (NOC) was forced to close several oil fields and an oil terminal. On Sunday, Al-Fil Fields oilfield and workers at facilities in Zouetina, Mellitah, Al Sarrir, and Al Khaleej were forced to stop work. The port in Zouetina was also blocked.
Thereafter, the NOC has no alternative but to declare a force majeure. Force majeure is an integral part of the contract that serves to release either party from legal obligations in the event of an uncontrollable event such as a labor dispute, terrorism, and natural disasters.
The suspension of oil production in Libya will further exacerbate the already tight oil supply on the world markets which has been caused by the sanctions imposed on Russia. Due to the ongoing war, Russian oil production fell by 7.5% in mid-April compared with March.
The International Energy Agency (IEA) has warned that Russia will not be able to export 3 million barrels of crude oil and other oil products per day in May due to sanctions against the country.
Analysts believe that oil prices will continue to recover. The decisive factor was the easing of Chinese lockdown measures in Shanghai. In addition, the warnings of OPEC Secretary-General Mohammad Barkindo that the current and future sanctions against Russia will lead to a severe oil shortage and there is no way to replace the missing oil.
Meanwhile, the European Union (EU) has adopted sanctions against Russian coal imports and will likely soon impose sanctions against Russian oil. Following the measures taken by the United States, Canada and Australia in response to the Russian attack on Ukraine.
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Tuesday, April 19, 2022