Oil prices on rise with Libya tensions & supply cuts

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Crude oil prices opened higher Wednesday with ongoing tensions in Libya, and with sanctions on Iran and Venezuela hindering secure supply, however, a weaker global growth expectation could keep some cap on rising prices.

International benchmark Brent crude was trading at $70.81 per barrel at 0637 GMT with a 0.28% increase after it ended Tuesday at $70.61 a barrel.

American benchmark West Texas Intermediate was at $64.24 a barrel at the same time for a 0.4 percent gain after closing the previous session at $63.98 per barrel.

Tensions escalated Tuesday in Libya between the UN-backed Government of National Accord and east Libya-based commander Khalifa Haftar who now controls around half of the oil fields in the country that have a total of 1.1 million barrels per day (bpd) of oil production.

The U.S. sanctions on Iran and Venezuela also caused supply declines in these countries, which are forecast to see their outputs decrease further.

Iran's oil production is estimated to drop to 2.65 million bpd in 2019, from 3.85 million bpd in 2018, according to the International Energy Agency's (IEA) Oil 2019 Report released on March 11.

Venezuela's oil production is also forecast to decrease to 750,000 bpd this year, from 1.31 million bpd last year, according to the report. In total, both Venezuela and Iran are expected to account for 1.76 million bpd in production loss in 2019.

On the demand side, global oil consumption is anticipated to remain weak this year, as the International Monetary Fund (IMF) was the latest organization to lower its forecast for global economic growth.

The IMF said Tuesday it now expects global economy to expand by 3.3% in 2019, compared to its previous estimate of 3.5% in January.

The slower economic growth is expected to keep oil demand low worldwide, and could keep some cap on rising crude oil prices.

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