Oil prices hit a fresh 2019 high this morning with international standard Brent crude futures reaching $70.77 (£54.21) per barrel.
Brent crude first broke through the vaunted $70 mark for 2019 on Friday, after falling to a low of $50.47 in January from $86.29 in October. The World Texas Intermediate (WTI) future price also hit a year-high of $63.48 per barrel today.
Hussein Sayed, chief market strategist at FXTM, said: “OPEC’s [Organization of the Petroleum Exporting Countries] ongoing supply cuts and US sanctions on Iran and Venezuela have been the major driver of prices throughout this year. However, the latest boost was received from an escalation of fighting in Libya which is threatening further supply disruption.”
On Friday and over the weekend tensions rose dramatically in the oil-producing country as the Libyan National Army headed by Khalifa Haftar advanced on the capital, Tripoli.
“If output from Libya is reduced significantly in the upcoming days and OPEC does not act, we may see a further five to 10 per cent surge in prices over the next two weeks,” he said.
The large drop in oil prices in the fourth quarter of 2018 came after oil producers turned on the taps at the behest of the Trump administration following its decision to slap sanctions on Iran in May, which raised fears of a production squeeze.
A plunging stock market also saw investors sell off risky assets such as commodities, while US-China trade tensions and higher interest rates added to oil’s problems.
The trend of falling oil prices ended in January, however, and since then the price has steadily been rising. This has caused consternation in the US White House, with President Donald Trump urging OPEC, an organisation comprised of 14 of the biggest oil producing states, to increase supply.
On 28 March Trump Tweeted: “Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!”