Oil prices dropped on Tuesday as fears about a weakening economy in China overshadowed the effects of a blockade on oil production facilities in Libya.
By 01:56 GMT, Brent crude futures had fallen by 37 cents, or 0.48 percent, settling at $77.15 a barrel.
Meanwhile, U.S. West Texas Intermediate crude, which did not settle on Monday due to the U.S. Labor Day holiday, rose by 28 cents from its Friday closing price of $73.55.
China’s economic indicators
In August, China’s purchasing managers’ index (PMI) reached a six-month low. Additionally, on Monday, China reported its first decline in new export orders in eight months for July and indicated that new home prices grew at the slowest rate this year in August.
Developments in Libya
The United Nations Support Mission in Libya announced that discussions were held on Monday to address a dispute over control of the central bank, which had led to a blockade of the country’s key oil production, reducing output to less than half of normal levels. According to the UN, rival factions have reached a draft agreement and plan to sign it on Tuesday, though further details were not provided.
Production cuts and export halts
Oil exports from Libyan ports remained suspended on Monday, with production significantly curtailed, as reported by six engineers to Reuters. The National Oil Corporation (NOC) of Libya stated on Monday that it had declared force majeure on its El Feel oil field starting September 2. Production had plummeted to just over 591,000 barrels per day (bpd) as of August 28, down from nearly 959,000 bpd on August 26, with production having been around 1.28 million bpd on July 20.
Read more: Oil prices drop as OPEC+ production rises, demand weakens
OPEC+ plans for output increase
Eight members of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are set to increase output by 180,000 bpd in October, a move that industry sources believe will proceed despite demand concerns. A Reuters survey on Monday revealed that global oil output last month fell to its lowest level since January.
Supply concerns intensified
Adding to supply worries, two oil tankers were attacked on Monday in the Red Sea near Yemen, though they did not suffer significant damage. In addition, Russia’s Gazpromneft Moscow refinery halted operations at one unit for repairs following a fire caused by a drone strike on Sunday; the facility processed 11.6 million tons of crude oil last year.
For more news on markets, click here.
