Oil prices are trading higher Tuesday, as hundreds of Norwegian oil workers strike after rejecting a pay deal from Shell. The move has led to the shutdown of one of Shell’s oil fields.
A steep decline in US oil inventories also continues to push prices higher, at a time when Libyan oil production is also lower and US sanctions on Iran are now in place.
By around 1230 BST, the price of Brent crude oil was 1.31% higher at $79.09 per barrel. The price of US WTI oil, meanwhile, gained 0.46% to hit $74.19 per barrel.
Norway oil workers’ strike
Hundreds of Norwegian oil workers are on strike Tuesday as they have rejected a new pay deal from Shell. The strike means that Shell’s Knarr oil field is offline until more progress on this disagreement is made.
“As a result of the strike, Knarr is closing its production in the Norwegian North Sea,” said Shell spokeswoman Kitty Eide,” according to a Reuters article.
“We started shutdown operations this morning and to complete them can take up to 36 hours. As soon as the strike is over, we will restart production. No other fields or platforms that we are operator of are affected by the strike,” Eide added.
US oil inventories slide
That closure of one of Shell’s Norwegian oil fields adds to pre-existing upward pressure on the price of oil after last week’s US oil inventory data showed the level of oil held at the US Cushing site in Oklahoma fell to a three-and-a-half-year low.
And, the price of oil could get a further boost as the US Iran sanctions remain in place and call on global importers of Iranian oil to find new sources for their imports.
While OPEC last month agreed to a modest output increase of oil, it might not be enough to calm the markets, particularly while Libyan oil production remains low.
On the flip side, if other oil producing countries ramp up output, that would reduce the amount of spare capacity if further disruptions occur – and that’s something that can also push the oil price higher.