Oil prices slumped 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers. Brent crude futures (LCOc1) fell $3.09 to $72.24 a barrel, a 4.1 percent loss, by 11:34 a.m. EDT (1534 GMT), while U.S. West Texas Intermediate (WTI) crude (CLc1) decreased $2.74, or 3.9 percent, to $68.27 a barrel.
Brent’s dive put it at its lowest level since mid-April. Supply outages in Libya, a labour dispute in Norway and unrest in Iraq all helped to push oil prices higher late last week, though prices still fell for a second straight week. “The complex has wasted little time in offsetting Friday’s gains as the spectre of increasing production out of Saudi Arabia, Russia and the U.S. has come under increased focus now that Libyan ports appear to be reopening,” Jim Ritterbusch, president of Ritterbusch and Associates said in a note.
Russia and other oil producers could raise output by 1 million barrels per day (bpd) or more if shortages hit the market, Russian Energy Minister Alexander Novak told reporters on Friday. Also weighing on futures were reports that the U.S. could tap its Strategic Petroleum Reserve, which would add supply to the market. Production in Libya remained under threat. While its ports are reopening, output at Libya’s giant Sharara oilfield was expected to fall by at least 160,000 bpd after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.
On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 bpd Sharara was slashed.
In Norway, a union for workers on oil and gas drilling rigs stepped up a six-day strike on Monday. Two protesters in Iraq died on Sunday in clashes with security forces in the town of Samawa amid anger in southern cities over public services and corruption. Demonstrations have yet to affect crude production.
U.S. Treasury Secretary Steven Mnuchin said Monday that the United States’ aim was to squeeze Iranian oil exports “to zero.” [nL1N1UB08Q] Mnuchin said that Washington wanted to avoid disrupting markets and would in some cases consider waivers, but that it had been made clear to allies that it expects them to enforce sanctions against Iran.
Mnuchin is expected to head to India to discuss sanctions; the country is a prominent importer of Iranian crude, but officials there have said it will reduce those purchases. Reuters