Oil Claws Back Some Losses on Prolonged Libyan Export Crisis

Oil has had a rocky start to the year as unrest rippled through OPEC producers from Iran and Libya.

22 Jan 2020, 10:09 AM IST

Oil Claws Back Some Losses on Prolonged Libyan Export Crisis

The sun sets beyond an offshore oil platform in the Persian Gulf’s Salman Oil Field near Lavan island, Iran. (Photographer: Ali Mohammadi/Bloomberg)

(Bloomberg) -- Oil erased some earlier declines as concern mounted about supply disruptions in Libya and Iraq despite ample output from other major producers.

Futures trimmed losses to settle little changed near $58 a barrel in New York on Tuesday. The Libyan port crisis that strangled exports from North Africa’s biggest oil supplier extended into a fourth day. Meanwhile, spreading unrest in Iraq threatened shipments from OPEC’s No. 2 producer.

The Libyan disruption is significant because “there is a lot demand for light, sweet crude” among refiners working to comply with stricter fuel rules, said Phil Flynn, an analyst at Price Futures Group Inc.

Oil prices also were pressured as a deadly virus from China spread to the U.S.

“There’s obviously a lot of concern with this virus in China,” said Josh Graves, senior market strategist at RJ O’Brien & Associates LLC.

QuickTake: What’s Behind Nine Years of Turmoil in Libya

West Texas Intermediate futures for February declined 20 cents to settle at $58.34 a barrel on the New York Mercantile Exchange. The contract expires Tuesday.

Brent crude for March settlement dropped 61 cents to $64.59 on the ICE Futures Europe exchange in London.

Libyan militia leader Khalifa Haftar has blocked ports in a show of defiance after world leaders failed to persuade him to sign a peace deal. In Iraq, protests halted production at one oil field and rockets reportedly hit the Green Zone in Baghdad after a weekend of unrest.

Other market news:
Ships hauling everything from coal to iron ore and consumer goods on domestic routes along India’s coast may run out of fuel as the nation struggles to meet new environmental standards. Goldman Sachs reiterated its $63-a-barrel forecast for Brent oil, but said it sees a 15-20% return due to a rotation of the forward price curve. For the first time in Russia’s alliance with OPEC, the country is changing the way it makes oil-production cuts. BP Plc has completed technical work at Iraq’s Kirkuk oil field, one of the Middle East’s oldest deposits where the government wants to boost production

Other market news:

Ships hauling everything from coal to iron ore and consumer goods on domestic routes along India’s coast may run out of fuel as the nation struggles to meet new environmental standards.
Goldman Sachs reiterated its $63-a-barrel forecast for Brent oil, but said it sees a 15-20% return due to a rotation of the forward price curve.
For the first time in Russia’s alliance with OPEC, the country is changing the way it makes oil-production cuts.
BP Plc has completed technical work at Iraq’s Kirkuk oil field, one of the Middle East’s oldest deposits where the government wants to boost production

--With assistance from James Thornhill, Sharon Cho, Saket Sundria and Grant Smith.

To contact the reporters on this story: Sheela Tobben in New York at vtobben@bloomberg.net;Jackie Davalos in New York at jdavalos10@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll, Catherine Traywick

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