Oil prices receive boost as tensions in Libya heat up

Oil prices receive boost as tensions in Libya heat up

Oil prices have jumped across Thursday trading, which has extended gains from the previous session.

The price of oil derivatives has been volatile, following both demand and supply issues which have weighed down on global commodities.

The coronavirus has been the main demand side factor which has pulled oil prices down – the outbreak reported a few weeks back has hindered trading in China and has also been spreading across the globe.

Business in China has slumped, which has caused demand for commodities to slow down dampening prices. Additionally, Japan recorded an economic contraction on Tuesday – Japan is the fourth biggest consumer of oil in the globe, and this also led to oil prices flattening.

Thursday has given some rejoice for oil prices however, oil derivatives have seen a boost. This however may not have spawned from demand side, but rather supply issues.

Ongoing political tensions in Libya have led to blockades of their industrial ports and oilfields, as no signs of a resolution have yet been shown.

US Sanctions remain on Rosneft (MCX:ROSN) which could cause further supply shortages in the market.

Libya’s leader Fayez al-Serraj has not reached a middle ground in negotiations following internal action from the Libyan National Army blocking ports. Analysts have said that they estimate that these tensions could cause oil exports to decrease by one million barrels per day.

US data yesterday showed that US Crude Stocks rose by 4.16 million barrels in the week to Feb. 14, compared with analyst expectations for a build of 2.5 million barrels – which is a positive take for commodity traders.

The price of Brent Crude is currently $58.78, rising by 0.1%. Whilst WTI Crude trades at $53.61 (+0.43%).

Oil prices are still seeing their fluctuations, the constant supply cuts made by OPEC+ in an attempt to control prices are working to an extent – however the issues in the Middle East continue to weight down on the supply side.