Oil price at year’s high on Libya clash

Oil prices on Monday jumped above $70 a barrel to their highest of the year as fighting in Libya unsettled the market.

The spike in Brent crude to $70.76, the highest since last November, is likely to be felt imminently at the petrol pumps by UK drivers and add to the potential inflation headaches for Bank of England rate-setters.

Libya’s internationally recognised government has vowed to counter-attack forces loyal to strongman Khalifa Haftar attempting to enter the capital Tripoli. The escalation of the conflict in Libya, which pumped 1.1 million barrels of oil a day last month, adds to risks to supply from Iran and Venezuela. The United States has targeted oil shipments from Venezuela to Cuba in its latest round of sanctions to pressure Venezuelan president Nicolas Maduro.

The skirmishes come against the backdrop of an Opec oil cartel ready to keep current production cuts in place beyond June. Despite the host of price drivers, other factors could bring oil down this year.

Analysts say Russia, which has reluctantly agreed with Opec to withhold output, could increase production if the deal is not extended before it expires at the beginning of July. US production also hit a record 12.2 million barrels per day last month.