Tuesday, June 26th 2018 witnessed a small yet noticeable rise in oil prices owing to uncertainty over Libyan oil exports. This took place a few days after Organization of Petroleum Exporting Countries (OPEC) announced their decision to increase oil supply by 1 million barrels per day (bpd).
Brent Crude futures, the international benchmark for oil prices, were at $74.81 per barrel at 0311 GMT, up 8 cents, or 0.1 percent, from their last close.
U.S West Trade Intermediate (WTI) crude futures were at $68.24 a barrel, up 16 cents, or 0.22 percent.
National Oil Corporation (NOC), a separate entity exclusive of the state owned NOC, based in the east of Libya has been given complete control over the oil ports by Eastern Libyan commander Khalifa Haftar. Ahmed Mismari, a spokesman of Haftar’s Libya national Army (LNA), confirmed the news on television saying that “no tanker would be allowed to dock at eastern ports without permission from an NOC entity based in the main eastern city, Benghazi.” Meanwhile the rights to sell oil still lie with the state owned NOC in Tripoli. This has created a lot of risk and uncertainty regarding oil exports from the Libyan end as the oil output seems to be shut in.
Jason Gammel of U.S. investment bank Jefferies believes that the tight supply is likely to drive oil prices higher during 2018 and he expects Brent prices to be in excess of $80 per barrel in 2018. According to Bank of America Merill Lynch (BoML), the market conditions would push the prices further up to $90 per barrel by the second quarter of 2019.
Apart from the Libyan issue, BoML warned of other factors leading to uncertainty in the market. One was the unclear impact of US sanctions against Iran and the second one was the inevitable effects of the trade war between USA and major economies European Union and China.
