Oil rises 2% as Libya outages add to Russia supply fears

Adding to supply pressures from sanctions on Russia, Libya’s National Oil Corp said on Monday that “a painful wave of shutdowns” had begun to hit its facilities and declared a force majeure event at the oilfield of Libya. Al-Sharara and other sites.

“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said OANDA analyst Jeffrey Halley.

Brent crude, the global benchmark, rose $2.40, or 2.2%, to $114.10 a barrel as of 1:20 p.m. EDT (1720 GMT). The contract rose to $114.84 a barrel, its highest since March 28.

U.S. West Texas Intermediate rose $2.15, or 2%, to $109.10 a barrel. The benchmark hit $109.81 a barrel, also the highest since March 28.

Deeper supply losses loom. Russian production fell 7.5% in the first half of April from March, Interfax reported on Friday, and EU governments said last week that the bloc’s executive was drafting proposals aimed at banning Russian crude.

These comments came before an escalation in the war in Ukraine. Ukrainian authorities said missiles hit Lviv early on Monday and explosions rocked other towns as Russian forces continued their shelling after claiming near-total control of the port of Mariupol.

In a bearish signal for prices, China’s economy slowed in March, tarnishing first quarter growth figures and worsening an outlook already weakened by COVID-19 restrictions.

Monday’s data also showed China refined 2% less oil in March than a year earlier, with throughput falling to its lowest since October as soaring crude prices squeezed margins and tight lockdowns reducing demand.

Oil hit its highest level since 2008 in March, with Brent briefly rising above $134.

“There’s still some confusion over whether they’re reopening their economy, so we’re getting mixed signals from China and that presented a lot of volatility this morning,” Price Futures Group analyst Phil Flynn said.

(Reporting by Stephanie Kelly in New York; additional reporting by Alex Lawler in London and Yuka Obayashi in Tokyo; Editing by Jacqueline Wong, Emelia Sithole-Matarise, Nick Macfie and Barbara Lewis)

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