Oil jumped more than 3% on Wednesday following reports of a supply disruption at a major Libyan oil field due to protests.
West Texas Intermediate (CL=F) traded as high as $72.90 per barrel during the session. Brent (BZ=F) crude touched $78.42 per barrel.
The shutdown of El Sharara, a site which produces 300,000 barrels per day, comes amid heightened concerns of geopolitical tensions further impacting supplies.
Last month shipping giants temporarily paused Red Sea shipments amid attacks by Houthi rebels in retaliation of the Hamas-Israel war.
On Wednesday, the Yemeni militant group backed by Iran said it targeted a container ship headed towards Israel. The move comes after US Navy helicopters destroyed three Houthi boats on Sunday in response to a container ship hijack attempt on the Red Sea.
The threat of a broader conflict disrupting Iran’s production has sent prices higher, at least temporarily. On Tuesday futures jumped more than 2% before paring gains after Teheran deployed a warship to the Red Sea.
“The real threat to prices is the Iranian oil exports (near 2 million barrels per day) that could suddenly be taken off the global market,” Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.
Crude futures lost more than 10% during a volatile 2023. The yearly decline in prices came despite aggressive production cuts by oil alliance OPEC+. Deeper output declines announced in late November were met by market skepticism, initially sending prices lower.
Analysts forecast that increased production coming from the US will help make up for the oil alliance’s production cuts in 2024.
“Near term US production has taken most of the slack that OPEC has cut,” said Kissler.
The oil cartel led by Saudi Arabia plans to hold an interim monitoring meeting in the first week of February, though a date has not formally been announced yet, according to delegates who spoke with Bloomberg.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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