By Barani Krishnan
Investing.com -- Oil prices rallied for a fourth straight session on Monday as production outages in Libya added to the upward pressure in a market where an European ban on Russian oil is expected due to the festering war in Ukraine.
Bloomberg reported that the Sharara field in the west of Libya was closed after protesters gathered at the site demanding Abdul Hamid Deborah’s ouster. The closure came after the nearby El Feel deposit for oil was halted for the same reason.
Global crude benchmark Brent settled Monday’s trade up $1.46, or 1.3%, at $113.16 per barrel. Brent rose 8.7% last week, after two back-to-back weekly losses that left it down by 13%.
New York-traded U.S. crude benchmark West Texas Intermediate, or WTI, finished up $1.26, or 1.2%, at $108.21. WTI closed up 8.8% last week, after the 13% tumble over two previous weeks.
“It was another risk to the oil supply that rallied the oil market,” Phil Flynn, analyst at Chicago’s Price Futures Group, said, while noting that China’s continued lockdown of its Shanghai city over Covid raised questions about energy demand in the No. 2 oil importing nation.
Bloomberg reported that Libya’s crude production has averaged just over 1.0 million barrels a day this year, down from almost 1.2 million in 2021. The drop is costing the country millions of dollars in lost revenue.
S&P Global (NYSE:SPGI) reported the 70,000 barrels-per-day El Feel oil field was closed on April 16 after protests demanding the ouster of the country’s prime minister, Abdul Hamid Dbeibah. Libya’s National Oil Corporation, or NOC, said on its website that “production has stopped completely” as of April 17, making it “impossible” for it to meet contractual obligations.
The NOC has called on all sides to preserve what is left of the “already dilapidated and worn out infrastructure” after years of civil war.
Adding to Monday’s rally was tough talk from Iran on Israel.
Reuters reported that Iran President Ebrahim Raisi had warned Israel against making even “the smallest movement” against Iran. The remark came on Monday as the Iranian military displayed homegrown weapons and defense systems marking National Army Day.
EU governments said last week the bloc's executive was drafting proposals to ban Russian crude, although diplomats said Germany was not actively supporting a US-style immediate embargo.
But those comments came before tensions grew in the Ukraine crisis over the weekend, with Ukrainian soldiers resisting a Russian ultimatum to lay down arms on Sunday in the pulverized port of Mariupol. Moscow, which calls its actions in Ukraine a "special operation", said its forces had almost completely seized the city, providing no signs of a ceasefire.
The International Energy Agency had warned that roughly 3 million barrels daily of Russian oil could be shut in from May onwards due to sanctions, or buyers voluntarily shunning Russian cargoes.
Russian oil production has continued to slide in April, declining by 7.5% in the first half of the month from March, the Interfax news agency reported on Friday.