Oil prices soar higher as Libyan unrest threatens output

International benchmark Brent futures reached US$71.24 per barrel at around 8.00am Greenwich mean time on Tuesday, while the US West Texas Intermediate crude futures traded at US$64.59 per barrel.

Oil prices soared higher on Tuesday on expectations of tightened global supplies due to the fighting in Libya, as well as the ongoing supply cuts from the Organization of the Petroleum Exporting Countries (Opec) and sanctions from the United States (US) against Iran and Venezuela.

International benchmark Brent futures reached US$71.24 per barrel at around 8.00am Greenwich mean time on Tuesday, while the US West Texas Intermediate (WTI) crude futures traded at US$64.59 per barrel.

Brent’s session high of US$71.24 and WTI’s US$64.59 mark the highest prices since November.

The prices are a step up from Monday's session, which saw Brent at a session high of US$71.19 and WTI at US$64.44.

Disruption to Libyan exports could lead to supply crunch

Investors are currently focused on supply concerns due to the fighting and unrest seen in oil-rich nation Libya.

The disruption to oil supplies from the North African country would affect European refiners, disrupt exports and could further tighten the market, leading to a global supply crunch.

If the fighting starts to reduce exports, it could lift the prices of Brent even further.

Analysts are expecting Brent to rise to US$75 per barrel or higher in the near term.

On top of the crisis seen in Libya, the Opec has pledged to withhold around 1.2 million barrels per day of oil supply since the start of this year while the US sanctions on Iran and Venezuela continue to limit supply. Those factors also drove the prices of crude oil up.

Read more on Oil prices rise to a five-month high on Monday.

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