Oil prices rose to their highest level since November 2018 on Monday, driven upwards by OPEC’s ongoing supply cuts, U.S. sanctions against Iran and Venezuela, fighting in Libya as well as strong U.S. jobs data.
International benchmark Brent futures were at $70.62 per barrel at 0716 GMT on Monday, up 28 cents, or 0.4 per cent from their last close.
U.S. West Texas Intermediate (WTI) crude was up 30 cents, or 0.5 per cent, at $63.39 per barrel.
Brent and WTI both hit their highest since November at $70.76 and $63.48 a barrel respectively early on Monday.
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To prop up prices, the Organisation of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year.
“OPEC’s ongoing supply cuts and US sanctions on Iran and Venezuela have been the major driver of prices throughout this year,’’ said Hussein Sayed, Chief Market Strategist at futures brokerage FXTM.
“However, the latest boost was received from an escalation of fighting in Libya, which is threatening further supply disruption.’’
Strong U.S. jobs data on Friday also still supported markets on Monday.
“Oil bulls are drawing heart from the strong employment data in the U.S.,’’ said Sukrit Vijayakar, Director of Energy Consultancy, Trifecta.
Despite the host of price drivers, there remain factors that could bring oil down later this year.
Russia is a reluctant participant in its agreement with OPEC to withhold output and it may increase production if the deal is not extended before it expires on July 1, Energy Minister, Alexander Novak, said on Friday.
Russian oil output reached a national record high of 11.16 million bpd last year.
In the U.S. crude production reached a global record 12.2 million bpd in late March.
U.S. crude exports have also risen, breaking through three million bpd for the first time earlier this year.
“With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports,’’ said energy consultancy, FGE in a note.
There also remain concerns about the health of the global economy, especially should China and the U.S. fail to resolve their trade dispute soon.
“Global demand has weakened and existing tariffs on Chinese goods shipments to the U.S. are providing an additional drag,’’ rating agency Moody’s said on Monday, although it added that Chinese stimulus measures would likely support growth over 2019.