The brent crude benchmark rose to $71 on Monday reaching a 5-month high. Brent is the major oil trading classification which serves as a benchmark price for oil worldwide. It is the index against which most oil nations price their oil in the market.
Brent hit a high of $70.86 per barrel recently. But the instability in Libya is raising the prospect of further supply constraints at the same time that the Organisation of Petroleum Exporting Countries has made cuts to production.
The fighting in Libya is nearing the capital of the United Nations-backed government in Tripoli. Khalifa Haftar, a 75-year-old warlord, has seized control of oilfields. Libya is a major supply channel in oil distribution worldwide but the war there is tightening supply chains.
The volatile nature of the situation means that the risk of fighting spreading towards the oil fields is increasing by the day.Jasper Lawler – Head Of Research, London Capital Group
In a related event, over 30 cargoes of Nigerian crude remained for April and May. One seller noted a decline in free-on-board sales for crude shipments in 2019, in another sign of flagging demand, while trading margins remained under pressure.