Brent Nears $110 On Renewed Conflict In Libya

Brent crude oil began the week a hair below $110 as geopolitical tension kept supply interruptions at the front of investors’ minds. The commodity traded at $109.99 at 5:45 GMT on Monday morning as conflicts in both Libya and Ukraine were in focus.

Reuters reported that over the weekend, armed gunmen stormed Libya’s parliament in what has been named the worst violence the nation has seen since 2011. The event reversed the positive sentiment that investors had for the small North African nation after the conflict between rebel groups and the government seemed to have dissipated earlier in May.

Libya’s government was able to come to an agreement with rebel leaders in April and had been reopening blockaded export terminals around the country. However, the eruption of further violence last week shut down most of the reopened oilfields and resulted in 43 dead and over 100 more wounded in Benghazi. Now, Libyan oil exports are down by about 200,000 barrels per day, a far cry from last year’s output of 1.4 million barrels per day.

Meanwhile, the situation in Ukraine showed no signs of easing over the weekend as US President Barack Obama and his French counterpart, Francois Hollande, said that Russia would face further sanctions if it continued to provoke conflict in Ukraine. Moscow has warned that it will cut off its natural gas supplies to Ukraine if the country doesn’t pay its $2.2 billion debt by June 2^nd. If the Kremlin does cut natural gas supplies, it could increase the demand for oil as a substitute fuel.