(LONDON) Oil prices were heading higher on Friday, buoyed by production outages in Libya and Ecuador, despite OPEC+’s extension of its marginal increase in production volume for August.
Posted yesterday at 8:33 a.m.
Around 7:30 a.m., a barrel of Brent from the North Sea for delivery in September, which is the first day of use as a benchmark contract, climbed 2.26% to 111.49 dollars.
A barrel of US West Texas Intermediate (WTI) for delivery in August, took 2.24% to 108.13 dollars.
“Oil prices are on the rise again, mainly due to the currently tight supply,” commented Commerzbank analysts Carsten Fritsch and Barbara Lambrecht.
According to them, the main reason remains the major production interruptions in Libya and Ecuador.
After more than two weeks of blockades and violence that left six people dead, the government and the leaders of the indigenous protests in Ecuador reached an agreement on Thursday to end the protests against the high prices which paralyze the country.
Libya, a country endowed with the most abundant reserves in Africa, but plunged into chaos since the fall of the Gaddafi regime, is struggling to emerge from the institutional crisis.
The Libyan National Oil Company (NOC) announced Thursday evening losses of more than 3.5 billion dollars resulting from the forced closure of major oil sites since mid-April, and decreed the state of “force majeure” on certain facilities.
On Monday, it warned that it would be forced to resort to “force majeure” within three days if production and export did not resume at terminals in the Gulf of Sirte.
Supply relief was not expected from the Organization of the Petroleum Exporting Countries (OPEC) and their partners (OPEC+). The latter renewed on Thursday their objective of opening the valves slightly more important for this summer, agreeing to an increase in production of 648,000 barrels per day in August, as in July.
A decision without surprise, in the opinion of analysts.
“The United States would have liked a greater gesture from the producer countries to deflate prices, and thus reduce the inflationary pressures that weigh on the purchasing power of households”, underlines Guillaume Dejean, of Western Union, ” only the capacities of the cartel prove to be more than limited”.
Demand for crude, however, is “slowed down by high prices and the weak economy,” Commerzbank analysts point out. What temper the rise in prices.