Oil Prices Rise Above $70 on Libya Turmoil

Military action in Libya has pushed the price of crude up to a 2019 high, but Morningstar analysts argue that the market is still oversupplied

Alliance News 8 April, 2019 | 12:55PM Morningstar Analysts
Facebook Twitter LinkedIn

US forces in Libya, April 2019

Stock markets were weaker today as oil rose above $70 a barrel amid continued fighting in Libya and tighter US sanctions on Venezuela.

Forces under Libya's UN-backed government said Sunday they had started a counter-attack against the forces of Khalifa Haftar after he launched an offensive to seize Tripoli, escalating an ongoing power struggle in the oil-rich country.

"The Armed Forces announce the launch of Operation Volcano of Anger to cleanse all Libyan cities from aggressors and illegitimate forces," spokesman Mohamed Ganounou of the UN-backed government's forces said in a statement.

Haftar, the chief of the self-styled Libyan National Army, had ordered his forces on Thursday to seize Tripoli from the rival government of Fayez Serraj.

Meanwhile, the US Treasury Department imposed sanctions on two companies operating in Venezuela's oil sector, in a move announced on Friday.

The measures appeared designed to also hit out at Cuba, which imports energy from the Latin American country.

"Cuba has been an underlying force fuelling Venezuela's descent into crisis. Treasury is taking action against vessels and entities transporting oil, providing a lifeline to keep the illegitimate Maduro regime afloat," Treasury Secretary Steven Mnuchin said in a written statement.

Vice President Mike Pence threatened more sanctions against both nations.

The Morningstar View

In 2019, supply and demand for crude look well-balanced. But that's only because OPEC volumes are expected to come in 1.4 mmbpd lower in 2019, making room for US firms to grow at 20%. And don't let them fool – most OPEC producers are just reversing a brief expansion in late 2018 rather than making real cuts. Most of the 1.4 mmbpd curtailment is due to unavoidable losses in Iran and Venezuela.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Alliance News  provides Morningstar with continuously updating coverage of news affecting listed companies.