Amid Analytical Demand Concerns, Libya Outage Causes Oil To Skyrocket

Meanwhile, Exxon says 2050 Net Zero goals won't be achieved: File Image/Pixabay

Considering the near-obsession of late about weakened demand and oversupply, it came as a surprise that crude traders on Monday reacted to news of Libya closing its oil exports by causing  oil prices to jump over 3 percent.

Brent settled up $2.41, or 3.05 percent, at $81.43 per barrel, while West Texas Intermediate settled up $2.59, or 3.5 percent, at $77.42 per barrel.

Matt Smith, lead oil analyst for the Americas at Kpler, told media that "The force majeure on Libyan production and exports has the potential to have a significant impact on global markets," since Libya produces about 1.2 million barrels per day (bpd), with more than 1 million bpd exported globally.

Dennis Kissler, senior vice president of trading at BOK Financial, said of Monday's crude trading, "The near-term buying seems justified."

Meanwhile, an earlier prediction made by Vivek Dhar, analyst at Commonwealth Bank of Australia – that any fall in oil prices tied to a Gaza truce "will likely be short lived" because the chances of a ceasefire being signed by Israel and Hamas were slim - proved accurate on Monday in that neither Hamas nor Israel agreed to compromises presented by mediators, according to Egyptian security sources.

However, despite geopolitical tensions at a near-fever pitch, Bloomberg pointed out that "fundamentals have been relatively unperturbed by the flare-up in the Middle East, which provides about a third of the world's crude."

The news agency added that "Volatility has remained below a peak at the start of the month, and options skews are still showing a bias toward puts — which profit from lower prices."

In other oil news on Monday, the questionable feasibility of reaching the International Energy Agency's Net Zero Emissions goals by 2050 was dealt another blow, this time by Exxon Mobil Corp., which predicted that global oil demand in 2050 will be the same or even slightly higher than current levels.

In its annual Global Outlook released Monday, Exxon stated that demand will remain above 100 million bpd through 2050, due to by growth in industrial uses such as plastic production and heavy-duty transportation.

This roughly falls in line with predictions made by the Organization of the Petroleum Exporting Countries (OPEC), which sees 116 million bpd of consumption in 2045, and Enbridge Inc., which predicts demand could exceed 110 million bpd.
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