Oil prices at 2-year high as pipe shuts

Oil prices leapt to a two-year high of $65.43 a barrel on Tuesday, as the shutdown of a key North Sea pipeline pushed prices northwards.

Pipeline owner Ineos shut down the link which brings 40% of the country’s North Sea oil ashore yesterday and said it would take weeks to fix the widening crack its engineers have discovered.

The problem has halted production from about 80 British oil and gas fields, and some Norwegian ones.

The Forties pipeline is Britain’s largest, which Ineos bought from BP in October, supplying about 450,000 barrels per day at its peak.

“The market reaction shows that in a tight market, any supply issue will quickly be reflected in higher prices,” analysts at ANZ bank said.

Oil prices have been climbing since September, bolstered by a decision by Opec and Russia to cut their oil output until the end of 2018.

The Opec producers first took action in January in a bid to battle a glut of crude which had led to prices falling sharply in the past three years. Tensions between Iraq and Iraqi Kurdistan have also pushed prices up.