Oil prices stabilized on Tuesday following a recent surge of over 7% in the past three sessions. Concerns about escalating Middle East conflicts and potential Libyan oil field closures had driven the recent rally.
By 0630 GMT, Brent crude futures were up 3 cents at $81.46 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 6 cents to $77.36 per barrel.
Yeap Jun Rong, market strategist at IG, noted that today’s limited price movements suggest a pause after the recent sharp increase. “The recent oil price jump reflects concerns about geopolitical risks in the Middle East and potential production halts in Libya, leading market participants to adopt a wait-and-see approach,” he said.
The previous price rise was fueled by expectations of U.S. interest rate cuts that might boost fuel demand, ongoing military clashes between Israel and Hezbollah in Lebanon, and the risk of Libyan oil field closures. Over this period, WTI rose by 7.6% and Brent by 7%.
On Monday, the eastern-based administration in Libya announced the closure of oilfields in eastern Libya, which account for nearly all of the country’s production, citing tensions over central bank leadership. However, this has not been confirmed by Libya’s internationally recognized government or the National Oil Corp (NOC). This dispute could impact Libya’s output of approximately 1.17 million barrels per day, according to recent data.
Vortexa analyst Serena Huang noted that while demand concerns, particularly from China, could influence prices, the potential closure of Libyan oil fields might tighten supply and support higher prices. “Other oil producers might benefit from the higher prices but may not immediately increase supply,” Huang added.
The ongoing conflict between Israel and Hezbollah has also contributed to market volatility, with recent missile exchanges adding to market concerns. ANZ analysts highlighted that “markets remain on edge” amid the intensifying skirmishes. A top U.S. general stated on Monday that while the risk of a broader conflict had somewhat eased, an Iranian strike on Israel remains a potential threat.
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