Oil Prices Slide As Libya Restarts Production

Libya’s National Oil Corporation will restart production from certain fields and some exports of crude oil, the company said, as quoted by local media, adding that it will only restart production at “safe” fields and exports from safe ports.

“Our main concern is to start production and exports taking into account the safety of workers and operations, as well as to prevent any attempts to politicize the national oil sector, which means that the NOC is doing its technical and non-political mission to resume operations in the safe areas and a technical evaluation is under way in preparation for the start of production and exports,” NOC’s chairman Mustafa Sanalla said.

The force majeure will be lifted from fields and ports that are free of the presence of paramilitary groups and mercenaries, but remain in effect for those where there are still such groups, which hamper the work of NOC, the company said.

The head of the Libyan National Army General Khalifa Haftar, whose troops, with help from affiliated groups, blockaded Libya’s oil ports in January, announced the end of the blockade on Friday. On the same day, NOC’s Sanalla said the force majeure will be lifted from the facilities only after they are demilitarized.

Currently, oil production in Libya is just 100,000 bpd—down from 1.2 million bpd at the start of the year, just before the blockade in January.

In recent weeks, rival factions and the foreign powers supporting them have been negotiating some kind of an agreement that could lead to Libyan oil returning to the global market at a time of weak demand recovery and weak oil prices. The latest news is likely to arrest or even reverse an improvement in oil prices that followed OPEC+’s latest meeting that offered a glimmer of hope for supply, if not demand.

But now that Libya will start bringing production back on, things may well change as the OPEC+ agreement relied on the country’s involuntary contribution to the overall supply curbs.

By Irina Slav for Oilprice.com

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