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Oil jumps after unrest hits key Opec producers Iraq and Libya
OIL jumped back above US$65 a barrel as supply disruptions in Iraq and Libya reignited concerns over the market's vulnerability to geopolitical risk in key production regions.
Futures rose more than 1.7 per cent in London and New York after Libya's oil production almost ground to a halt as armed forces closed a pipeline, shuttering output from the nation's biggest oil project.
Meanwhile in Iraq, output stopped at a field on Sunday, with supply from a second site threatened as unrest escalates in Opec's second-biggest producer.
The double-whammy of disruptions in two key producers has jolted focus back to supply risks as oil markets continue their dramatic start to the year.
Brent crude has swung in an US$8-a-barrel trading range as initial fears that the US killing of a top Iranian general threatened Middle East exports gave way to confidence that the world had an adequate supply cushion.
"Supply risks are the main driver behind oil's advance - from US-Iran tensions to Libya's disruption and now to Iraq's production halt at a major oil field," Kim Kwangrae, a commodities analyst at Samsung Futures, said by phone.
"While a potential surge in crude output from non-Opec countries will limit oil's further increase, the market will continue to be rattled by these geopolitical risks for now."
Brent crude added as much as US$1.15, or 1.8 per cent, to US$66 a barrel on the ICE Futures Europe exchange and traded at US$65.52 as of 3.40 pm in Singapore. West Texas Intermediate futures climbed as much as US$1.19, or 2 per cent, to US$59.73 on the New York Mercantile Exchange, before easing to US$59.08. BLOOMBERG