Oil Prices surge sharply on Kazakhstan unrest and Libyan outage

crude oil

On Thursday, oil prices rose sharply, carrying forward the rally from the previous session as the unrest escalated in Kazakhstan and supply outages increased in Libya. While Russia moved paratroopers into the OPEC+ oil producer Kazakhstan, the Libyan oil output decreased to 729,000 bpd. The U.S. gasoline stocks also rose as a consequence.  

At writing, the global benchmark Brent crude oil (BZ=F) rose 1.53 points to $82.33 (+1.89%) per barrel. It had opened at $80.15 while the Crude oil Feb 22 (CL=F) went up 2.14 points to $79.99 (+2.75%) per barrel. WTI crude was up 1.92 points at $79.77 (+2.47%).  

The contracts have risen significantly, and crude oil prices have been the highest since November.   

The impact of the unrest in Kazakhstan and the supply outages in Libya have hit the crude oil prices, sending the fuel prices to new heights across the globe.  

Kazakhstan Tensions  

On Thursday, Russia sent its Paratroopers into Kazakhstan to help in ending a nationwide uprising after deadly violence spread across the former Soviet state.   

“The political situation in Kazakhstan is becoming increasingly tense. And this is a country that is currently producing 1.6 million barrels of oil per day.”

Commerzbank said.  

Kazakhstan, the tightly controlled nation, which produces 1.6 million barrels of oil per day, is seeing a worsened political situation. However, there are yet no indications of the effect on oil production; the mere news of unrest sent the price soaring.  

Libyan Oil Supply Outage  

Due to pipeline maintenance and oilfield shutdowns across the gulf nation, Libyan oil output is down. As a result, the country’s oil output went down by around 500,000 barrels per day. Libya’s exports continue to falter, and the supply chain has been hit badly.   

Despite the surge in U.S. fuel stocks, the prices rallied. Last week, the U.S. crude oil stockpiles fell while gasoline inventories surged more than ten million barrels. Due to the reduced fuel demand, the supplies backed up at refineries; it is the most significant weekly build since April 2020.   

The fall in demand for fuel is credited to the rise in Covid cases. The U.S. Federal Reserve meeting has shown that the policymakers may raise rates faster than the market anticipations. Oil, therefore, becomes a riskier asset.  

On Tuesday, OPEC+, a group including the Organization of the Petroleum Exporting Countries, Russia, and others, agreed to add another 400,000 bpd of supply in February.  

The six-month market structure of Brent stood at about $4 a barrel, going backward, where the current prices trade at a premium to future prices.  

The world’s top oil exporter, Saudi Arabia, has cut the official selling price for all crude grades it sells into the Asian market in February. The price has been cut down by at least $1 a barrel.  

The Russian allies entering Kazakhstan and Libyan supply outage are further expected to impact the prices in the coming days as well. 

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