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Oil Markets Shrug Off Supply Disruptions In Libya And Brazil

Libya’s oil production has dipped below 400,000 barrels per day after shipments from a key port were disrupted, according to Bloomberg.

The Zueitina port was shuttered by the internationally recognized government in the east, blocking exports of crude from the terminal. The National Oil Corporation is under the control of the rival government based in Tripoli. The eastern government wants oil tankers seeking to take shipments of crude to be registered under a rival national oil company that it has set up.

The conflict illustrates the high stakes conflict between the two governments for control over the country’s oil exports, which is critical for both parties to establish a functioning government. Libya produced around 430,000 barrels per day in October, but that level has now dropped. Related: North Dakota No Longer Attractive For Drillers Or Refiners

There are several other ports – notably Hariga and Brega – that could be affected if the eastern government decides to escalate the standoff. If that were to occur, Libya’s oil exports could theoretically fall to just 100,000 barrels per day or less.

The closing of Zueitina has affected oil exports by Wintershall AG, which runs the As-Sarah field.

Meanwhile, there are other reported supply outages around the world. In Brazil, an oil workers strike is cutting into the production of state-owned oil company Petrobras. The indebted oil company has sought to slash spending and sell off assets in an effort to trim down its high levels of debt, but a group of oil workers unions started striking on November 1 in protest of the sales. According to the FUP, the oil workers union, the strike has already cut off 450,000 barrels per day of oil production. Related: U.S. Production Finally Starting To Drop Significantly

Petrobras said on Monday that only about 273,000 barrels per day of production has been knocked off line. But the protest appears to be spreading. “This is serious because it is happening in the midst of Brazil's worst economic crisis in decades and in the middle of Petrobras' worst crisis ever,” Adriano Pires of the Brazilian Infrastructure Institute told Reuters.

The outages from both Libya and Brazil could cut down on the global excess of oil supplies. For now, there has not been a significant impact on prices. In the past, outages of that size would have caused prices to spike, but the world is still working its way through a glut in supply.

By Charles Kennedy of Oilprice.com

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