Oil up on scarcity issues triggered by storm-related output disruptions in Libya

Oil prices spiked on Wednesday, bolstered by supply disruptions in Libya, output cuts from Saudi Arabia and Russia, and positive expectations over the trajectory of the global economy.

International benchmark crude Brent traded at $92.29 per barrel at 09.59 a.m. local time (0659 GMT), a 0.25% gain from the closing price of $92.06 a barrel in the previous trading session on Tuesday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $89.11 per barrel, up 0.30% from the previous session's close of $88.84 per barrel.

Brent oil prices reached a fresh 10-month high of $92.40 a barrel on Tuesday on supply disruptions in Libya. Catastrophic floods after Storm Daniel killed at least 5,300 people and forced Libyan authorities to close four oil ports as a precautionary measure.

Libya, a large producer of light, sweet crude oil, sends around 85% of its exports to Europe. Conflict-related damage has crippled local refineries, forcing many to go offline or operate at significantly reduced capacity. Furthermore, Libya sells a sizable quantity of gas to Europe.

Oil prices have been under tight supply pressure since Saudi Arabia and Russia announced their decisions earlier in September to reduce their supplies by 1 million barrels per day (bpd) and 300,000 bpd, respectively, for the rest of the year, with possible monthly revisions.

The OPEC group, meanwhile, issued its monthly oil market report on Tuesday, when the group stated its demand and supply projections.

According to the report, ongoing global economic growth is forecast to drive oil demand, especially given the recovery in tourism, air travel, and steady driving mobility. Oil demand is expected to grow by 2.4 million bpd year over year in 2023 and 2.2 million bpd in 2024.