Oil prices rally post-Brexit vote on Norway strike threat

Jessica Morris
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Oil workers in Norway are threatening to strike (Source: Getty)

Oil shook off a two-day slump which ensued after Britain's vote to leave the EU, helped by the threat of a union strike by Norwegian oil and gas workers.

The strike at western Europe's biggest producer, which could start as soon as Saturday, would add to a string of outages in oil-producing countries such as Nigeria.

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Brent crude, the global benchmark, jumped 1.91 per cent to $48.06 per barrel this evening. Its US counterpart, West Texas Intermediate, swelled 2.12 per cent to $47.31.

The benchmarks had lost about eight per cent in the past two sessions. But oil investors got off lightly compared to those in global equities and currency markets, which were ripsawed by the Leave vote.

Analysts were positive about the outlook for oil despite Britain's vote to leave the European Union, saying they believed the gap between supply and demand would continue to diminish.

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"We see the tightening of the oil market within the mid to longer term as inevitable with the impact of reduced spending and cancelling and re-phasing of projects seeing a meaningful shortfall appear," analysts at Barclays wrote in a note.

"The challenge for oil investors is now how any near-term volatility will play out."

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