Brent crude oil prices shot up more than one per cent today to break $65 a barrel and reach their highest level since mid-2015 after the major Forties pipeline in the North Sea was shut down for repairs yesterday.
Ineos, which recently became the owner of the pipeline, said a shutdown was the safest way forward after a small hairline crack was found in the pipeline, which carries about 450,000 barrels per day, or 40 per cent of UK production.
Brent crude futures, the global benchmark, rose to as high as $65.70 a barrel this morning after adding to gains from yesterday. West Texas Intermediate (WTI) prices, the US benchmark, received a smaller boost, rising up more than 0.7 per cent to $58.46 a barrel, but the price difference between the two widened to as much as $7, the most since May 2015.
Brent was last above $65 per barrel in June 2015.
Fawad Razaqzada, an analyst at Forex, said: "This has put oil bulls on alert because no one is quite sure how long the closure is going to last with a spokesman for operator Ineos saying it could take 'several weeks'.
"Although there are ample supplies of oil in storage tanks, this may not be enough to meet demand if the repair works take longer than 'several weeks'. The Forties Pipeline System delivers the main crude oil underpinning the Brent benchmark; hence why it surged higher today."
The government yesterday assured there was no "security of supply issue" for fuel or gas as a result of the repairs.
Jasper Lawler, analyst at London Capital Group, added: "We suspect any pullback after this latest surge will be limited and that Brent is on its way to challenge the 2015 high near $68 per barrel."
The rise in oil prices lifted the stocks of London-listed oil majors as well. BP's shares rose 0.8 per cent to 502.7p in morning trading, while Shell's stock rose 0.62 per cent to 2,427.5p.