Following a pipeline explosion in Libya, crude oil prices have risen to over $60 a barrel. This marks the highest oil has been in 2.5 years. Reports from Libya’s state-run National Oil Corporation stated that the explosion jeopardized output by 100,000 barrels a day. U.S. crude oil rose by 2.5% on Tuesday; this was following a spike it had last month when the keystone pipeline was shut down due to an oil spill. But prices still remain low compared to the $100 per barrel price seen 3 years ago. The past couple of years have been tough for the oil industry, and it has been trying to rebound for some time now.
Crude oil prices tanked in 2014 through 2016, hitting a low in 2016 of only $26 per barrel. Prices have been slow to rebound due to an over-supply in the market. Foreign oil was being produced at greater quantities than ever before, added to the U.S. shale boom that saw a dramatic increase in the oil produced domestically.
The crude oil crash had OPEC and its 14-member countries propose production limits that have helped oil prices rebound slowly. These limits have been extended through the end of 2018. Libya, who is a member of OPEC, was exempt from the oil production limits due to unrest in the country. However, with this accident it seems that oil prices are on the rise once again.
U.S. oil companies have been on the rise lately. Domestic production has increased, as well as the fact that U.S. oil companies have been able to undercut foreign oil companies in local markets and turn a profit. It is hard to root for oil companies, since we pay the price at the gas pumps, but it is good to see an industry rebound after a major crash like the one the oil industry experienced the last few years.