Brent Steady Near $107 Amid Global Supply Glut

Brent crude oil was steady above $107 as investors kept an eye on global instabilities, but relaxed their worries about a supply interruptions, as the market appears to have a glut of crude.

The commodity traded at $107.61 at 7:30 GMT with the conflicts in Gaza and Libya in focus.

In Libya, the government appeared to have completely lost control of the situation as the conflict escalated. Fighting near the airport ended with stray missiles causing two fuel-tank fires. Several embassies, including those from the U.S. and Germany, evacuated as clashes between rival militia worsened in the nation’s capital. 

However, despite the chaotic situation in Tripoli, the worsening conflict has had little impact on oil prices, most likely because the OPEC producer’s export capacity has been below one million barrels per day for nearly two years. For that reason, most analysts believe the risk of a Libyan supply interruption has already been factored in.

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Tension between Moscow and the West continued to worsen as well, with the U.S. accusing Russian President Vladimir Putin of “doubling down” on the conflict in Ukraine.

U.S. officials allege that Russia is continuing to send arms to Ukrainian rebels despite the accidental downing of a Malaysian Airlines passenger plane two weeks ago. In response the U.S. and the EU have tightened their sanctions against Russia, this time enacting sanctions against the nation’s finance, defense and energy sectors.

Although geopolitical tension is threatening crude supplies in several parts of the world, Brent prices remained depressed because of an oversupply in the market. 

According to CNBC, global oil production is well above global demand, which has kept prices lower. A Morgan Stanley analyst said the firm sees global oil supply capacity growing at its fastest rate in 10 years, something demand won’t be able to catch up to.