Oil prices have reached a two-and-a-half-year high after a hairline crack was found in one of the world’s most important oil conduits. The Forties Pipeline System, which carries 40% of North Sea oil and gas, is closing for repairs after the fault was found near Aberdeen, Scotland.
This pushed Brent crude to over $65 a barrel, which it hasn’t reached since June 2015.
Tom Crotty, Director of Ineos Group, which operates the Forties network, said that the pipeline’s closure is a “force majeure situation” that will prevent the operator from moving oil through the system for the next two weeks. He said that they will know in the “next few days” how long the system will be closed for. Although routine maintenance work on pipelines is common, closures related to cracks of this nature are not.
Oliver Jakob, an analyst at Petromatrix, a Swiss-based consultancy, said:
“It’s more than just a supply disruption because it’s more significant as a price maker. There’s one thing which is the volume of oil which is lost, but it’s also that it’s a key price benchmark.”
Also, according to McKinsey Energy Insights, the closure may benefit sellers the Middle East and Asia-Pacific region as buyers look at alternatives to the North Sea supply.
Have your say. Sign up now to become an Author!
More on UK
Freezing Over? – The Future of UK-Russian Relations
Anglo-Russian relations have recently become frosty with the poisoning of the Skripals putting the two governments at loggerheads. Will...
Non-EU Migrants: The Windrush Affair
It’s business as usual in the UK’s Home Office – charged as it is in dealing with current immigration policies...
Beast from the East Hits First Quarter Retail Sales
Snowy weather in March as a result of the ‘Beast from the East’ led to British shoppers staying at home,...