Oil Jumps as Week Opens on Libyan Disruption, Russian Warning

(Bloomberg) — Oil rose as supplies from Libya were interrupted and Russia warned of the potential for record prices if more nations ban its energy.

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West Texas Intermediate advanced toward $108 a barrel after rallying last week by the most in two months. Two Libyan ports have been forced to stop loading oil after protests against Prime Minister Abdul Hamid Dbeibah, with output halted at the El Feel, a 65,000-barrel-a-day field. Crude’s market structure strengthened in a bullish pattern, with Brent’s prompt spread back above $1 a barrel.

Russia’s Deputy Prime Minister Alexander Novak said if more nations joined a ban on Russian energy imports, prices may “significantly exceed” historic highs. The U.S. and U.K. have moved to bar Russian crude after Moscow’s invasion of Ukraine, and there’s pressure for the European Union to follow.

Oil has rallied this year in highly volatile trading as the war in Ukraine disrupted supplies in an already-tight global market. The surge prompted the U.S. and allies to release millions of barrels of crude from strategic reserves to contain inflationary pressures. OPEC and its partners have declined to raise the pace at which they are restoring output shuttered during the pandemic.

Oil traders were also monitoring the impact of anti-virus curbs in top importer China, which has ordered a slew of lockdowns including in Shanghai. While the commercial hub has plans to resume work, there’s no firm timetable to do so.

Oil markets remain in backwardation, a bullish pattern marked by near-term prices above longer-dated ones. Brent’s prompt spread — the gap between its two nearest contracts — was $1.09 a barrel, up from 21 cents a week ago.