Oil prices touched their highest levels in more than a week on Monday after Libya’s National Oil Corporation (NOC) announced that two big oilfields were shutting down after forces supporting the Libyan National Army closed a pipeline. The move is the latest in a long-standing period of political conflict in Libya where warring factions have been fighting over control of the country for the past five years. Over 150,000 people have been displaced in the current conflict, and thousands of people have been killed.
Brent crude futures surged 1.23 percent as of 3:02 p.m. HK/SIN, to $65.65 per barrel, and U.S. WTI futures were up 1.08 percent to $59.17 per barrel. Libya has been producing approximately 1.2 million barrels per day in the past few months, and the disruption in the country’s southwestern oil fields is expected to halt production of about 800,000 barrels per day. According to CNBC analysts, a prolonged disruption will keep oil prices higher for an extended period. Al Jazeera reports that the Libyan economy will be the hardest hit and will face serious problems from the oil disruption. “The oil and gas sector is the lifeblood of the Libyan economy and the single soul income for the Libyan people,” the news outlet quoted NOC Chairman Mustafa Sanalla as saying on Friday.
The escalation over the weekend came as global leaders met in Berlin on Sunday for a peace conference which was aimed to bolster security in Libya and create some sort of truce.
Currency Movements
The currency markets remained in their state of low volatility on Monday. U.S. stock markets will be closed in celebration of Martin Luther King Day, and this will do little to bring volatility back to the markets. Likewise, the upcoming Chinese New Year is expected to slow down the markets even further.
The dollar index was down 0.02 percent in the mid afternoon in Asia, trading at 97.59 .DXY. The greenback gained modestly against the yen, up 0.03 percent to 110.17. The pound eased against the dollar, down 0.085 percent to $1.2997, while the euro gained 0.09 percent to trade at $1.1098.
Traders are now eager to see how the wheels for last week’s U.S.-Sino trade deal will be put into place, and whether or not both sides will honor their commitments. Also on the radar this week is a slew or earnings reports on Wall Street which will give traders a glimpse into the state of the country’s economy from a new vantage point.