Global oil prices traded higher, buoyed by supply disruptions of 2.5 million barrels per day in some countries, including Nigeria and Canada.
Brent crude, the global oil benchmark, rose by 1.59 per cent to $45.20 per barrel, while the United States West Texas Intermediate traded around $44.51.
Following the spate of attacks on oil and gas assets, Nigeria’s output of crude oil has declined, now close to a 22-year low, putting intense pressure on the country’s finances.
Last week, a group known as the Niger Delta Avengers attacked Chevron’s Okan platform, a collection facility for offshore oil and gas that feeds the Escravos terminal in southern Nigeria. The oil major said the damage to the platform had affected about 35,000 barrels per day of its own net crude production, or about 15 per cent of its output in the country.
The group had in February claimed responsibility for a strike against a Shell pipeline, which shut down the 250,000 bpd Forcados export terminal.
The violence depressed production in the country to roughly 1.69 million bpd in May, the lowest since at least June 2007, when production fell to 1.68 million bpd, International Energy Agency data indicated.
A small reduction from any field would quickly send output to the next low, seen in August 1994, when it hit 1.46 million bpd, according to the IEA data.
Wildfire in Canada’s oil-rich Alberta province has knocked off some 1.6 million bpd, according to consultancy Energy Aspects. Several companies including Suncor, BP and Phillips 66 have declared force majeure on Canadian crude.
“The wildfires in Alberta, rising tensions and further disruptions to crude exports in Libya, and a new outage in Nigeria amid increasing violence have definitely added some bullish pressure to prices,” said an oil analyst at SocieteGenerale, Michael Wittner, said.
The production outages are helping to reduce crude output, boosting expectations that the global glut of crude that has battered prices since mid-2014 could be shrinking.
But analysts say that the disruptions are temporary and most of those barrels will come back online soon. In addition, Saudi Arabia’s state-owned oil company on Tuesday said it would increase its output this year.
“The current reality is that the global oil market remains oversupplied this quarter, and crude and product inventories are more than ample,” Wittner said.
The supply disruptions across the globe eclipsed worries about rising US crude inventories, which were expected to have grown for a fifth straight week last week to record highs above 543 million barrels.
Oil companies operating in Nigeria should evacuate staff from the Niger Delta following several attacks on oil facilities, a senior oil workers’ union official said on Tuesday.
“Best thing for any reasonable company to do is evacuate its workforce,” the Chairman of the Warri branch of the Nigeria Union of Petroleum and Natural Gas Workers, Cogent Ojobor, was quoted by Reuters as saying.
The Chairman of the Trade Union Congress in Rivers State, Chika Onuegbu, said Chevron had evacuated some workers from the Delta following a similar move by Shell.
“There is high alert around various installations around the Niger Delta due to recent attacks. Those evacuated are where their platforms have been attacked, but others are working,” Onuegbu said.
