Oil price up over sustained fears of tight supply from Russia, Libya

By Ebru Sengul Cevrioglu

IZMIR (AA) - Oil prices increased on Thursday as global markets considered the possibility of an EU ban on Russian oil and gas, while Libyan production cuts last week raised shortage concerns.

International benchmark Brent crude cost $108.44 per barrel at 0618 GMT for an 1.53% increase after closing the previous session at $106.80 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $103.69 per barrel at the same time for a 1.47% rise after the previous session closed at $102.19 a barrel.

EU discussions over banning Russian oil and gas and the German announcement of its plan to stop oil imports from Russia by the end of the year put prices under pressure on Thursday.

"Phasing out coal by the end of the summer. We'll halve oil by the summer and zero it out by the end of the year," German Foreign Minister Annalena Baerbock announced Wednesday after talks with her Baltic counterparts.

In a visit to Kyiv on Monday, European Council President Charles Michel also pledged more European support for Ukraine amid its ongoing war with Russia.

Regarding the EU’s dependency on Russian energy, Michel said that the 27-member bloc has already decided to stop its dependency on Russian gas and oil but admitted “it will take time.”

He further said: “And we are working very hard today with partners to be able to take the decisions that are needed."

Meanwhile, production cuts in Libya also supported higher prices, with the country having declared a force majeure in the El-Feel, El-Sharara and Brega oilfields, along with the Zuwetina oil port during the week.

The oil fields and the port were shut down after a group stormed the facilities and prevented employees from working. The oil company, however, did not identify the perpetrators.

Libya has the ninth-largest known oil reserves globally and the largest oil reserves in Africa.

However, oil exports from the storm-halted Caspian Pipeline Consortium (CPC) oil pipeline, which collects crude oil from large oil fields of West Kazakhstan and from Russian producers, is expected to resume soon and offset supply shortages from Libya.

The CPC's Black Sea crude export terminal could return to full capacity by the end of the week, the Minister of Energy of Kazakhstan Bolat Akchulakov was quoted as saying by international media outlets.

Oil exports via the CPC stopped last month after a storm damaged tanker loading facilities at the Novorossiysk terminal, causing almost a one-month halt in terminal operations.

The 1,500-kilometer pipeline, which starts at the Tengiz field in Kazakhstan on the eastern shores of the Caspian, carries more than two-thirds of the country’s oil exports.

Signaling strong demand and supporting the upward price trajectory, the Energy Information Administration (EIA) announced a 1.9% decrease in the US commercial crude oil inventories on Wednesday for the week ending April 15.

Inventories fell by 8 million barrels to 413.7 million barrels, against the market expectation for a rise of 2.5 million barrels. Gasoline inventories also decreased by 800,000 barrels to 232.4 million barrels over the same period.