Oil prices soared to their highest in more than two years on Tuesday, December 12, after the shutdown of a North Sea pipeline knocked out significant supply from an already tightening market.
Brent crude futures, the global benchmark for oil prices, rose above $65 a barrel — their highest since mid-2015 — after Britain’s Forties pipeline was shut due to cracks as a cold snap sweeps the country.
The Forties pipeline is important for the global oil market because the crude it carries normally sets the price of dated Brent, a benchmark used to price physical crude around the world and which underpins Brent futures.
The shutdown comes as oil supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) have helped chip away an excess of inventories built up following a global supply glut which began to emerge in late 2014.
“The disruption to Forties is not just about missing barrels, it is also about losing a key component for the main seaborne crude oil benchmark,” said Olivier Jakob, analyst at Petromatrix.
U.S. crude oil futures CLc1 were last 0.7 percent higher at $58.41 a barrel. Prices of gas across Europe also soared following an explosion at Austria’s main gas transfer hub and as Russian gas, Reuters reports.
