Oil baron Algy Cluff warns Brexit could squeeze lending to distressed North Sea firms

Jessica Morris
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(FILES) File Photo taken in the North Se
Oil prices rebounded today, mimicking a rebound across financial markets (Source: Getty)

UK oil baron Algy Cluff has warned Britain's vote to leave the European Union could make life harder for distressed oil and gas firms in the North Sea.

"The banks haven't been falling over themselves to lend money to oil companies there recently, rather the reverse, and [the Brexit vote] could compound that I'm afraid," he told City A.M. today.

Read more: Oil major BP has brushed off Brexit backlash

He added that it would increase pressure on the government to elevate exploration in the North Sea. "If we’re going to be an island we need as much control over energy supply as possible."

Others warned that Brexit's impact on the ability of banks to lend to the energy sector would be felt worldwide.

"As a result of Brexit European banks have been under pressure ... accessing debt for new [oil and gas] projects may become more difficult," Stephane Foucaud, an analyst at oil brokerage First Energy Capital, said.

Both believe the immediate impact of Britain's decision to leave the EU would be minimal, as the North Sea's fate is much more tied to oil prices.

Read more: Oil shakes off post-Brexit vote losses on Norway strike threat

Crude burst to life today, mimicking a rebound across financial markets on reduced fears of contagion from last week's surprise result.

Brent crude, the global benchmark, jumped 2.01 per cent to $48.11 per barrel this evening. Its US counterpart, West Texas Intermediate, swelled 2.22 per cent to $47.36.