Light Bid On Libyan Disruption; EU Oil Sanctions In The Works

WTI is +$0.90 and Brent is +$1.10 at writing, back from best levels and on track to extend a three-session streak of gains. Both benchmarks have caught a light bid as focus turns to the European Commission’s preparations to include oil in the EU’s incoming sixth round of sanctions on Russia, with European Commission head von der Leyen touting “clever mechanisms” to include Russian oil in the package, adding to well-documented worry over shortfalls in global crude supplies.

• A note that both the IEA and OPEC revised their crude demand forecasts for ‘22 downwards last week, pointing to overall lower-than-expected consumption from OECD countries, and an ongoing COVID outbreak in China.
• To elaborate, the Chinese authorities continue to expand pandemic control measures, with more areas/cities being placed under some form of movement restrictions, most notably a partial lockdown on the city of Xian (pop. 13mn) on Friday.
• Elsewhere, some Libyan oil production and export operations were suspended after protestors forced their way into the Al-Fil oil field and two ports on Sunday, resulting in disruptions at all three locations. Production at the Al-Fil oil field is estimated at around 70K bpd, while a RTRS source report pointed to a tanker being blocked from loading ~1mn bbls at the port of Zueitina.