© Reuters. Storage tanks are seen at the Petroineos Ineos refinery in La Vera, France, on March 29, 2022. Photo taken on March 29, 2022. REUTERS/Benoit Tessier
LONDON (Reuters) – Oil prices rose on Monday as supply concerns over OPEC production cuts, unrest in Libya and sanctions on Russia overshadowed fears of a global recession that will dent demand.
Euro zone inflation hit another record high in June, reinforcing the case for the European Central Bank to raise interest rates quickly, while US consumer confidence hit a record low.
After falling more than $1 in early trade, it was up $2.26, or 2%, at $113.89 a barrel at 12:47 p.m. ET (1648 GMT). U.S. West Texas Intermediate (WTI) crude rose $2.20, or 2 percent, to $110.63 in thin trade during the U.S. Independence Day holiday.
A Reuters survey found that the Organization of the Petroleum Exporting Countries (OPEC) missed its output increase target in June. [OPEC/O]
In OPEC member Libya, authorities on Thursday declared force majeure at the ports of Es Sidr and Ras Lanuf and the El Feel field, saying oil production fell by 865,000 barrels per day (bpd).
Meanwhile, Ecuador’s production has been hit by more than two weeks of unrest, costing the country nearly 2 million barrels of oil, state-run oil company Petroecuador said.
Aside from the potential supply woes, a strike in Norway this week is likely to cut supplies in Western Europe’s largest oil producer and reduce overall oil production by about 8%.
“Amid growing supply disruptions, Middle East oil producers may experience a shortage of spare capacity,” said Stephen Brennock of oil broker PVM, referring to producers’ limited ability to pump more oil.
“Without new oil production coming into the market soon, prices will be forced higher.”
British Prime Minister Boris Johnson on Monday called on the OPEC+ producer group to produce more oil to combat the cost of living crisis.
Brent crude this year has come close to breaking its 2008 record high of $147 a barrel after Russia’s invasion of Ukraine heightened supply concerns.
A Russian oil ban and cuts in natural gas supplies have sent energy prices soaring, pushing inflation to multi-decade highs in some countries and stoking fears of a recession.