- Tight Global Supply Pushes Oil to 5-month High on Tuesday
Oil price sustained its bullish run on Tuesday following a report of violence in Libya, one of the world’s crude oil producers.
Brent crude, against which Nigeria’s crude is measured, rose to $71.34 per barrel on Tuesday before easing to $70.98.
The U.S. West Texas Intermediate (WTI) crude oil gained 0.2 per cent to $64.53 a barrel.
While the U.S. sanctions on exports from Iran and Venezuela has aided oil prices in recent months, Libyan civil war was what pushed prices to almost 5 months high as investors anticipated a further disruption in global oil supply.
Libyan Eastern forces on Monday moved close to Tripoli after attacking the city’s only functioning airport with a warplane.
Also, the decision of the Organization of the Petroleum Exporting Countries (OPEC) and allies to reduce production by 1.2 million barrels a day in the first half of 2019 boosted investors confidence.
“We expect the drivers of this deficit to persist through 2Q19” due to a “shock and awe implementation of the OPEC cuts … further tightening of U.S. oil sanctions and an only moderate increase in shale production for now,” Goldman Sachs said in a note.
Brent crude could reach $75 a barrel by the second half of the year if the U.S and China reached an agreement on trade dispute, however, with Russia planning to increase production by June due to falling stockpiles, Brent crude should trade between $65 and $70 this year.
Brent crude has risen 40 per cent this year alone.