Oil prices rose to their highest level since November 2018 on Monday, driven by OPEC supply cuts, U.S. sanctions against Iran and Venezuela and fighting in Libya as well as strong U.S. jobs data.
U.S. West Texas Intermediate (WTI) crude futures were up 30 cents, or 0.5 percent, at $63.38 per barrel. Brent and WTI both hit their highest since November at $70.83 and $63.53 a barrel, respectively, early on Monday. To prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, pledged to withhold around 1.2 million barrels per day (bpd) of supply from the start of this year.
“OPEC’s ongoing supply cuts and U.S. sanctions on Iran and Venezuela have been the major driver of prices throughout this year,” said Hussein Sayed, chief market strategist at futures brokerage FXTM.
“However, the latest boost was received from an escalation of fighting in Libya which is threatening further supply disruption,” he added.
Despite the host of price drivers, there are still factors that could bring oil prices down later this year. There also remain concerns about the health of the global economy, especially should China and the United States fail to resolve their trade dispute soon.
“Global demand has weakened, and existing tariffs on Chinese goods shipments to the U.S. are providing an additional drag,” rating agency Moody’s said on Monday, although it added that Chinese stimulus measures would likely support growth over 2019.