LONDON: Oil rose on Monday as supply concerns driven by lower OPEC output, unrest in Libya and sanctions on Russia outweighed fears of demand-sapping global recession.
Euro zone inflation hit yet another record high in June, strengthening the case for rapid European Central Bank rate increases, while U.S. consumer sentiment hit a record low.
Brent crude rose $1.55, or 1.4%, to $113.18 a barrel by 1318 GMT after falling more than $1 in early trade. U.S. West Texas Intermediate (WTI) crude rose $1.34, or 1.2%, to $109.77.
The Organization of the Petroleum Exporting Countries (OPEC) missed a target to boost output in June, a Reuters survey found.
In OPEC member Libya, authorities declared force majeure at Es Sidr and Ras Lanuf ports as well as the El Feel oilfield on Thursday, saying oil output was down by 865,000 barrels per day (bpd).
Meanwhile, Ecuador’s production has been hit by more than two weeks of unrest that has caused the country to lose nearly 2 million barrels of output, state-run oil company Petroecuador said.
Adding to potential supply woes, a strike this week in Norway could cut supply from Western Europe’s largest oil producer and cut overall petroleum output by about 8%.
“This backdrop of mounting supply outages is colliding with a possible shortage in spare production capacity among Middle Eastern oil producers,” said Stephen Brennock of oil broker PVM, referring to the limited ability of producers to pump more oil.
“And without new oil production hitting markets soon, prices will be forced higher.”
Brent came close this year to the 2008 record high of $147 a barrel after Russia’s invasion of Ukraine added to supply concerns.
Soaring energy prices on the back of bans on Russian oil and reduced gas supply has driven inflation to multi-decade highs in some countries and stoked recession fears.