Unrest in Kazakhstan and Libya Shoots up Oil Prices

The ongoing unrest in Kazakhstan and the supply outage in Libya have bolstered global oil prices on Thursday.

The deadly violence, across the tightly controlled former Soviet state, has been condemned by Russia, which sent paratroopers on Thursday into Kazakhstan to quell the unrest.

However, there were no indications that oil production in the country has been affected so far.

“The political situation in Kazakhstan is becoming increasingly tense.” German financial institution, Commerzbank said, “And this is a country that is currently producing 1.6 million barrels of oil per day.”

The Global benchmark Brent crude futures rose $1.78, or 2.2%, to $82.58 a barrel by 1445 GMT, the highest since late November. U.S. West Texas Intermediate (WTI) crude futures also gained $2.18, or 2.8%, to $80.03, the highest since mid-November.

However, Brent’s six-month backwardation stood at about $4 a barrel, its widest since late November.

Backwardation is a market structure where current prices trade at a premium to future prices. It is usually a sign of a bullish market.

In Libya, lack of maintenance and oilfields shutdowns has plunged the leading African oil producer’s output to 729,000 bpd.

According to Libya’s National Oil Corp on Thursday, production slumped from a high of more than 1.3 million bpd recorded in 2021.

The oil prices rallied despite a surge in United States fuel stocks last week.

The North American country’s crude oil stockpiles fell last week while gasoline inventories surged by more than 10 million barrels, the biggest weekly build since April 2020, as supplies backed up at refineries because of reduced fuel demand, Reuters noted.

OPEC+ on Tuesday agreed to further increase oil production by 400,000 bpd in February, as it has done each month since August.

Top oil exporter, Saudi Arabia however cut the official selling price for all grades of crude it sells to Asia in February by at least $1 a barrel.