The U.K.'s largest pipeline from the North Sea was shut down for repairs, initially sending oil futures higher before they turned sharply lower.
[ibd-display-video id=2881825 width=50 float=left autostart=true] Ineos, the U.K. refining and chemicals company that operates the Forties pipeline, said while a small leak has been contained, the pipeline will be shut down for weeks for repairs near Aberdeen, Scotland.
The pipeline carries roughly 445,0000 barrels of oil per day and helps set the price of benchmark Brent.
Brent crude fell 2.1% to settle at $63.34 per barrel, after earlier rising above $65 for the first time since 2015. U.S. crude settled 1.5% lower at $57.14.
"This oil can't be easily replaced as other sweet oil producers are near their limits," Phil Flynn, a senior market analyst at the Price Futures Group, wrote in his daily energy report.
"Shale oil in the U.S. may help, but the producers can't quickly ramp up supply nor can they move the oil fast enough to alleviate the shortage. The reverberations of this outage will be felt at first in Asia and Europe, but it will have ramifications for oil product prices around the globe."
Shares of Exxon Mobil ( XOM ) closed down 0.3% on the stock market today . Chevron ( CVX ) fell 0.6%, BP ( BP ) rose 1.8%, and Royal Dutch Shell (RDSA) added 0.9%.
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OPEC and top nonmembers agreed last month to extend a deal through 2018 to remove 1.8 million barrels of oil per day from the market, also helping prop up prices.
But Kuwait's oil minister, Issam Almarzooq told Bloomberg Sunday, that the production cuts could end before 2019 if the oil market rebalances. He suggested that members will discuss an exit strategy at the biannual meeting in June.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
