(Bloomberg) -- Oil climbed as fears of crude outages in Libya exacerbate a global energy crunch.
West Texas Intermediate rose as much as 3.5% to top $96 a barrel on Monday. While Libya’s output remains stable amid clashes between militias in the capital, traders are watching for signs that the violence may halt oil shipments at a time when Europe’s energy crisis is worsening.
Iran, meanwhile, said negotiations with the US over a European Union proposal to revive a nuclear deal will drag on into September, undercutting speculation that increased oil flows are imminent.
“The one trade that everyone can agree upon is that the oil market will likely remain tight,” said Ed Moya, senior market analyst at Oanda. “Oil rallied on rising risks of a potential civil war that could put Libyan output at risk and over growing expectations that OPEC+ is positioning themselves to cut production.”
Crude is on course for a third straight monthly drop on concern global growth will slow as central banks tighten policy aggressively, hurting consumption. To counter that weakness, Saudi Arabia raised the possibility last week that the Organization of Petroleum Exporting Countries and its allies could cut output, drawing support from fellow members. The cartel will meet Sept. 5 to consider production levels for October and to review the outlook for the rest of the year.
Separately, loadings from an export terminal for Kazakhstan crude have seen interruptions.
Cries of supply shortages continue to come from all corners, with Shell Plc’s Chief Executive Officer Ben Van Beurden, saying it’s a “fantasy” that the global energy crunch will be easy to overcome, at a conference in Norway. Speaking at the same event, Tesla Inc. CEO Elon Musk said the world needs more oil and gas now while also pushing to transition to renewable supplies.
Meanwhile, the EU is planning an emergency intervention to dampen the spike in power prices. As natural gas prices rally and trade five times higher than crude futures, it will be giving strong incentives for energy switching, said Francisco Blanch, head of global commodities and derivatives research at Bank of America Corp. in a note to clients.
In a bullish note on commodities, Goldman Sachs Group Inc. said that crude oil had scope to push higher, especially amid shortages of other energy raw materials including natural gas.
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