Oil prices rally as fighting in Libya threatens supply

Oil prices hit their highest level so far this year on Monday, fuelled by violent clashes in oil-rich Libya.

The country has been hit by fighting between competing administrations, claiming the lives of at least 25 people and pushing several thousand to flee the violence.

The instability poses a threat to the supply of oil from Libya.

A barrel of Brent crude was trading 0.97% higher at 71.08 US dollars.

Fiona Cincotta, senior market analyst at City Index, said: “The turmoil in the oil-rich North African country is adding to the already tightening oil market where supplies are curtailed because of Opec production cuts and US sanctions on Iran and Venezuela.”

But the rally in oil was not enough to cause any major movements on European markets or currencies, with both the FTSE 100 and pound almost flat at the end of the day.

The pound was down 0.01% versus the US dollar at 1.304, and down 0.19% against the euro to 1.158.

“With hints of some kind of Brexit breakthrough between Theresa May’s government and Labour, alongside news of the PM’s extension-seeking whistle-stop tour of Berlin and Paris, but no hard evidence of progress, sterling was pretty mixed,” said Connor Campbell, financial analyst at Spreadex.

Meanwhile the FTSE 100 was almost flat, climbing just 5.02 points, or 0.07%, to 7451.89.

BP led the risers on the blue-chip index, benefiting from the higher oil prices to rise 9.6p to 578.2p.

It was closely followed by A shares in Royal Dutch Shell, which were up 29.5p to 2,505p.

Elsewhere on the stock market, it was another day of share price fluctuation for Debenhams, as Mike Ashley’s Sports Direct made an offer to underwrite a £150 million rights issue which was later rejected.

The tracksuit tycoon’s offer, which depended on installing himself as chief executive of Debenhams, initially caused a jump in the company’s share price.

But Sports Direct revealed in the afternoon that its advances had been rebuffed.

Debenhams was expected on Monday night to be heading towards a pre-pack administration.

Shares closed 0.21p, or 10.29%, lower at 1.83p.

In other news, student accommodation provider Unite Group said that reservations for the next academic year are “progressing strongly” and are ahead year on year.

Shares in the firm were up 1.5p to 935p.

The annual report for British Gas owner Centrica revealed that chief executive Iain Conn pocketed a £2.4 million pay packet last year, despite the firm losing hundreds of thousands of customers as it embarked on a major jobs cull.

Shares in the firm were down 0.5p to 110.2p.

In Europe, the German Dax was down 0.39%, while the French Cac was down 0.08%.

The biggest risers on the FTSE 100 were BP up 9.6p to 578.2p, Royal Dutch Shell (A) up 29.5p to 2,505p, Rio Tinto up 53.5p to 4,718p and Royal Dutch Shell (B) up 25.5p to 2,522.5p.

The biggest fallers on the FTSE 100 were NMC Health down 109p to 2,417p, Just Eat down 33p to 738.4p, Paddy Power down 142p to 6,128p and Melrose Industries down 3.8p to 189p.