With West Texas Intermediate prices climbing above the $60 mark this week, it was due to a pipeline that exploded in Libya. As a result of the explosion, a large part of supply was knocked offline.
The rise above $60 a barrel was the first time in two and a half years that WTC hit that high of a mark.
The line carries crude oil to thee Es Sider oil export terminal which is Libya’s largest. The explosion, according to several reports came during an attack by militants.
Libya’s National Oil Company announced the explosion will drop output by 70,000 to 100,000 barrels a day. The blast also caused the Waha Oil Co. to immediately divert production to thee Samah line which will keep oil flowing in the country.
Still, a National Oil Company spokesman indicated the reduction in production would result in nearly 100,000 barrels a day. As a result, the rise in WTI prices will have an effect on production in Oklahoma, Texas and other U.S. oil-producing states.
Brent crude prices in London rose more than 2.5 percent as a result of news of the explosion, closing at $67 a barrel.
The explosion isn’t the first disruption of the Es Sider terminal. It has suffered several disruptions in recent years. Its return to operation has helped Libya increase oil production and exports. Shipments have hit 1 million barrels of oil a day while a year ago, they totaled only about half of that amount.
