The international oil benchmark, Brent crude, extended its gains on Monday, rising to a five-month high.
Brent, against which Nigeria’s crude oil is priced, hit a high of $70.86 per barrel, with instability in Libya raising the prospect of further supply constraints at the same time that the Organisation of Petroleum Exporting Countries (OPEC) has made cuts to production.
The fighting in Libya is nearing the capital of the United Nations-backed government in Tripoli. Khalifa Haftar, a 75-year-old warlord, has seized control of oilfields.
Crude prices have been boosted by continuing production cuts by OPEC and its allies, US sanctions on Iran and Venezuela, as well as easing worries about weaker global trade.
A worsening security situation in Libya has also sparked concerns that supply from the major oil producer could be disrupted.
“The volatile nature of the situation means that the risk of fighting spreading towards the oil fields is increasing by the day,” said Jasper Lawler, head of research at the London Capital Group, a broker, according to CNN.
In a related development, Nigerian crude being offered at high prices continues to encounter scepticism from buyers, while Angolan cargoes for May loading were close to being sold out on the back of strong Asian demand for medium-heavy grades, Reuters reported on Monday.
April loading cargoes were clearing as buyers have picked up bargains compared to offers for the same grades for May which are hovering near five-year highs.
Over 30 cargoes of Nigerian crude remained for April and May. One seller noted a decline in free-on-board sales for crude shipments in 2019, in another sign of flagging demand, while trading margins remained under pressure.