Oil prices rose early Friday as a result of Iran’s planned production cut report, which came at the same time that Libya declared force majeure, limiting exports. The development has raised supply concerns in the global commodities market, increasing the risk of rising energy costs as countries battle inflation.
Demand outlook appears positive as U.S. second-quarter gross domestic product (GDP) was revised up to 3% from 2.8% previously. The GDP revision “sparked the bull run across multiple asset groups today,” Mizuho’s Robert Yawger says in a note.
Brent crude trades at $79.16 a barrel on Friday. The US benchmark West Texas Intermediate (WTI) climbed 0.37% to $76.19 per barrel after closing at $75.91 in the previous session.
Concerns about probable supply constraints caused by Libya’s halt of oil production fueled price increases. Libya’s National Oil Corp. stated Thursday that the losses incurred as a result of the eastern government’s decision to shut down oil and gas production in the country exceeded $120 million over three days.
In a statement, the corporation, which manages the country’s oil resources, said that oil production rates had dropped from nearly 1.3 million barrels per day on Monday (the day the shutdown began) to 591,024 barrels on Wednesday. Libya, a significant member of the Organization of Petroleum Exporting Countries (OPEC), produced 1.18 million barrels of crude oil per day in July.
Oil prices jumped over 1% on Thursday after it was reported that Iraq planned to reduce its oil production in September as part of a plan with the Organization of Petroleum Exporting Countries.
Iraq will cut output to between 3.85 million and 3.9 million barrels per day after producing about 4.25 million bpd in July.
Elsewhere, the European gas market is grappling with a series of supply concerns despite ample inventories cushioning risks ahead of the winter, according to analysts.
The Dutch TTF contract, which currently trades 1.1% higher at 39.33 euros a megawatt-hour, is up roughly 7% on the week and 12% on the month.
Annual maintenance in top supplier Norway, with gas exports this week hitting their lowest level since June, and fears that Russian gas flows via Ukraine will be disrupted before the expiration of a transit deal between the two countries, are among the main factors supporting prices in the near term.
