Oil rises above $79 a barrel on Norway strike, Libyan disruption

Brent leads crude prices higher as Norway oil workers get ready to strike

Brent leads crude prices higher as Norway oil workers get ready to strike

While the US futures contract is only edging higher, the Brent futures contract is surging due to rising supply concerns fueled by a potential wildcat strike by hundreds of oil workers in Norway.

Benchmark Brent oil futures rose by $1.13 per barrel, or 1.4 percent, to $79.20 per barrel by 0915 GMT, following a 1.2-percent climb on Monday.

The U.S., Saudi Arabia and Russian Federation all fear the start of a potential global economic slowdown if price rise too high. USA light crude futures were up 53 cents, or 0.7 percent, at $74.38.

An oil pump jack is seen at sunset near Midland, Texas, U.S., May 3, 2017.

"That basically took the wind out of the sails from the market", said Phil Flynn, analyst at Price Futures Group in Chicago.

Earlier in the session, prices had been within striking distance of the four-year highs, said Bob Yawger, director of energy futures at Mizuho. But it all depends on which countries they're talking about. Is it big buyers of Iranian crude? "Is it India?. Is it temporary waivers?"

Mounting supply concerns could push Brent above $85 per barrel, MUFG Bank said in a note.

Hundreds of workers on Norwegian offshore oil and gas rigs went on strike on Tuesday after rejecting a proposed wage deal, leading to the shutdown of one Shell-operated oilfield.

Last month, the United States said it wanted to reduce oil exports of fifth-biggest producer Iran to zero by November.

In other news, Libya's National Oil Corporation said production fell to 527,000 barrels per day from a high of 1.28 million bpd in February following recent oil port closures.

Elsewhere, in Canada an outage at the 360,000-barrel per day (bpd) Syncrude oil sands facility had reduced flows into Cushing, Oklahoma where inventories hit a three-and-a-half-year low last week.

"As prices rise to higher levels, the air is growing thin and oil demand is already faltering", Barclays noted.

Saudi Arabia, fellow members of the Organization of the Petroleum Exporting Countries and allies including Russian Federation agreed last month to increase output to dampen price gains and offset global production losses in countries including Libya.

The market has grown concerned that if the Saudis offset the losses from Iran, that will use up global spare capacity and leave markets more vulnerable to further or unexpected production declines.