Oil Futures are rising thanks to Supply Concerns

Oil futures rose today, lifted by supply concerns as Iraq reportedly planned production cuts and Libya saw disruptions to crude exports due to a pay dispute.

West Texas Intermediate crude for March delivery was up by 0.2% (10 cents), at $52.37 a barrel on the New York Mercantile Exchange. March Brent crude which is the global benchmark, was up 0.2% (11 cents), at $55.52 a barrel on ICE Futures Europe (an Exchange for Futures).

Iraq plans to produce 3.6 million barrels a day of oil in January and February, news reports said, which would fall below the 3.86 million barrels a day allowed under the agreement by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+. The deeper cuts aim to compensate for overproduction by the country in 2020.

It would be worthy to note that If Iraq manages to reduce output to these levels, it would be the lowest output from Iraq recorded in the oil markets since 2015. However, given Iraq’s record of falling short with production cuts, there is no guarantee that they will meet this target.

Meanwhile, Libya, on the other hand, has halted all oil exports from some of its major ports (e.g ports of Ras Lanuf, Es Sider and Hariga) due to a pay dispute.

For context, it is important to note that Libya had previously seen a remarkable recovery in oil production hitting more than 1.2 million barrels a day in December after producing less than 100,000 barrels a day in August.