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Oil prices hit a 3-week high after Libya shuts down its largest production hub amid political crisis

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  • Libya shut down its largest oil field amid protests against Libyan Prime Minister Abdul Hamid Dbeibah.
  • The outage sparks more global supply fears, and Libya's National Oil Corp warned of a wave of closures.
  • Brent crude prices jumped above $113 (R1,666.70) a barrel for the first time since March, and WTI traded around $108 (R1,592.95). 
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Oil prices face more turmoil and supply strains as Libya shut down its largest oil field following protests against Libyan Prime Minister Abdul Hamid Dbeibah. 

Brent crude rose 2.5% to $114.55 (R1,691.05) a barrel, the highest since March, while West Texas Intermediate rallied 2.3% to $109.44 (R1,615.84). 

Outages have piled onto ongoing Russia supply fears, and Libya's National Oil Corp (NOC) warned Monday of a "painful wave of closures" across its facilities. After protestors entered the Al-Fil field, the NOC declared a "force majeure" and suspended production. 

"With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices," OANDA analyst Jeffrey Halley told Reuters.

NOC manages the Al-Fil field with Italian energy company ENI, and the production hub is responsible for about 70,000 barrels of oil per day. In March, the field also had temporarily shut down too due to an armed group entering the location.

Libya's state news agency reported that protestors said they would halt production "until a government appointed by parliament takes office in the capital."

The field closure comes as global energy markets trade on shaky geopolitics, with Russia threatening to cut off supply to "unfriendly" nations while the US and its allies look to ban Russian crude imports amid the Ukraine war.  

Russian oil has continued shipping in April, though cargoes are traveling much further distances to find buyers. More shipments are being sent to Asia and the Mediterranean, Bloomberg reported.

So far, the European Union, which is very reliant on Russian oil, has moved to ban Russian coal imports, but has stopped short of banning oil and gas immediately. However, EU governments said last week the bloc was weighing a proposal for a crude ban.

Meanwhile, Ukraine's government has called for the world's top energy traders to stop handling Russian crude altogether.

"The fact is that traders and trading and they are helping Russia to receive this blood money," President Volodymyr Zelenskyy's adviser told the FT. 

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