Oil surges as Libyan pipeline shutdown cripples output
Oil prices jumped on Monday after two large crude production bases in Libya began shutting down amid a military blockade, setting the stage for crude flows from the OPEC member to be cut to a trickle.
Brent crude LCOc1 futures were up by 75 cents, or 1.2%, to $65.60 by 0109 GMT, having earlier reached $66.00 a barrel, the highest since Jan. 9. The West Texas Intermediate CLc1 contract was up by 60 cents, or 1%, at $59.14 a barrel, after rising to $59.73, the highest since Jan. 10.
In the latest development in a long-running conflict in Libya, where two rival factions have claimed the right to rule the country for more than five years, the National Oil Corporation (NOC) on Sunday said two big oilfields in the southwest had begun shutting down after forces loyal to the Libyan National Army closed a pipeline.
If exports are halted for any sustained period, tanks for storage will fill within days and production will slow to 72,000 barrels per day (bpd), an NOC spokesman said. Libya has been producing around 1.2 million bpd recently.
Also on Sunday, foreign countries agreed at a summit in Berlin on Sunday to shore up a shaky truce in Libya, even as the talks were overshadowed by the latest blockade.
German Chancellor Angela Merkel told reporters that the Berlin summit, attended by the main backers of the rival Libyan factions, had agreed that a tentative truce in Tripoli over the past week should be turned into a permanent ceasefire to allow a political process to take place.