Oil prices rise on supply disruption jitters as geopolitical tensions grow

Oil prices edge up on Kazakhstan, Libyan supply worries

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Singapore: Oil prices rose slightly on Monday as supply disruptions in Kazakhstan and Libya offset concerns about the rapid increase in Omicron infections worldwide.

Brent crude gained 16 cents, or 0.2%, at $81.91 a barrel at 0406 GMT, while U.S. West Texas Intermediate (WTI) crude was up 15 cents, or 0.2%, at $79.05 a barrel.

Oil prices gained 5% last week after protests in Kazakhstan disrupted train lines and hit production at the country’s top oilfield Tengiz, while a pipeline maintenance in Libya pushed production down to 729,000 barrels per day from a high of 1.3 million bpd last year. 

Kazakhstan’s largest oil venture Tengizchevroil (TCO) is gradually increasing production to reach normal rates at the Tengiz field after protests limited output there in recent days, operator Chevron (CVX.N) said on Sunday. 

“Growing supply outages in places like Libya and others have re-centered the spotlight on supply availability,” RBC Capital analysts said in a note.

The bank added that if Russia invaded Ukraine, it could disrupt Russia’s crude oil exports to Europe and push up oil prices.

Eight years after Russia seized the Crimean peninsula from Ukraine, thousands of Russian troops gathered near the border with Ukraine to prepare for what Washington and Kiev had said about a possible invasion.

Rising global demand and lower-than-expected supply increases from the Organization of Petroleum Exporting Countries, Russia and its allies or OPEC+ also provide support for oil.

OPEC’s output in December rose by 70,000 bpd from the previous month, versus the 253,000 bpd increase allowed under the OPEC+ supply deal which restored output slashed in 2020 when demand collapsed under COVID-19 lockdowns. 

U.S. energy firms kicked off the new year by continuing to add oil and natural gas rigs after increasing the rig count in 2021 after two years of declines. 

The oil and gas rig count, an early indicator of future output, rose two to 588 in the week to Jan. 7, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Globally, governments from Europe to China and India have put in some curbs as they grapple with the highly transmissible Omicron variant. 

In the United States, due to a shortage of workers, employment growth in December was lower than expected, and because the spiral of COVID-19 infection disrupted economic activities, employment growth may remain moderate in the short term.

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