Oil prices jump on supply worries amid Kazakhstan unrest

[MELBOURNE] Oil prices rose on Friday (Jan 7) as an uprising in Kazakhstan stoked worries that crude supply from the Opec+ producer could be disrupted at the same time output has dropped in Libya.

Brent crude futures climbed US$0.48, or 0.6 per cent, to U$82.47 a barrel at 0127 GMT, adding to a 1.5 per cent jump in the previous session.

US West Texas Intermediate (WTI) crude futures rose US$0.50, or 0.6 per cent, to U$79.96 a barrel, extending a 2.1 per cent gain in the previous session.

"The upward jump in oil prices mostly reflects the market jitters as unrest escalates in Kazakhstan and the political situation in Libya continues to deteriorate and sideline oil output," Rystad Energy analyst Louise Dickson said in emailed comments.

After days of unrest in Kazakhstan, during which the government declared a state of emergency, Russia on Thursday (Jan 6) sent in paratroopers to quash the uprising. The protests began in Kazakhstan's oil-rich western regions after state price caps on butane and propane were removed on New Year's Day.

Brent and WTI were on track to post a 6 per cent gain in the first week of the year, with prices at their highest since late-November, as supply concerns overtook worries that the rapid spread of the Omicron variant might hurt demand.

Supply additions from the Organization of the Petroleum Exporting Countries, Russia and allies, together called Opec+, are not keeping up with demand growth.

Opec's output in December rose by 70,000 barrels per day from the previous month, well short of the 253,000 bpd increase allowed under the Opec+ supply deal, which restored output that was slashed in 2020 when demand collapsed under Covid-19 lockdowns.

Production in Libya has dropped to 729,000 barrels per day, down from a high of 1.3 million bpd last year, partly due to pipeline maintenance work.

REUTERS