The markets shouldn’t worry too much about a sudden flow of 1.2 million barrels of oil per day out of Libya. Yes, some of the ports and oilfields have been reopened. But this conflict isn’t over. It’s very fluid, and dangerous power-jockeying in both the east and west portend more trouble ahead. When there’s trouble in Libya, oil is always held hostage.
As we noted last week, Fayez al-Sarraj of the GNA in Tripoli has announced his intentions to resign. That has led to an immediate power struggle in the west. The GNA is at odds with itself at this point and two key military figures - acting defense minister Salah Eddine al-Nimroush and a high-level GNA commander, Osama al-Juwaili - are now setting the stage for the next leg of the conflict. And, importantly, neither of these GNA military figures accepts the signing of the deal with Haftar that got the LNA general to agree to allow the ports to be opened and the oil to flow again. That agreement was signed by Ahmed Maitig, the VP of the Presidency Council.
Their power struggle in Tripoli could reset the tentative “peace”.
Elsewhere in the Middle East, the oil crisis is far from over, which means that opening the floodgates of Libyan oil is even less welcome. Had the Turks not intervened in Libya against Haftar (whose allies include oil powers Saudi Arabia and UAE), the GCC powerhouses would have been fine letting this conflict simmer and letting Haftar fend for…
The markets shouldn’t worry too much about a sudden flow of 1.2 million barrels of oil per day out of Libya. Yes, some of the ports and oilfields have been reopened. But this conflict isn’t over. It’s very fluid, and dangerous power-jockeying in both the east and west portend more trouble ahead. When there’s trouble in Libya, oil is always held hostage.
As we noted last week, Fayez al-Sarraj of the GNA in Tripoli has announced his intentions to resign. That has led to an immediate power struggle in the west. The GNA is at odds with itself at this point and two key military figures - acting defense minister Salah Eddine al-Nimroush and a high-level GNA commander, Osama al-Juwaili - are now setting the stage for the next leg of the conflict. And, importantly, neither of these GNA military figures accepts the signing of the deal with Haftar that got the LNA general to agree to allow the ports to be opened and the oil to flow again. That agreement was signed by Ahmed Maitig, the VP of the Presidency Council.
Their power struggle in Tripoli could reset the tentative “peace”.
Elsewhere in the Middle East, the oil crisis is far from over, which means that opening the floodgates of Libyan oil is even less welcome. Had the Turks not intervened in Libya against Haftar (whose allies include oil powers Saudi Arabia and UAE), the GCC powerhouses would have been fine letting this conflict simmer and letting Haftar fend for himself a bit longer - just to keep the oil under wraps until the market could balance out.
Instead, the Saudi prince is in trouble to some extent. Public finances have been decimated to the point that the Crown Prince is now aggressively trying to speed up his domestic tourism plans to shore up funds. And Oman, a low-level crude producer burdened with huge debt, will launch dollar-denominated bonds up to $4 billion because of the oil price slump. Oman has earned for itself a junk rating by all major rating agencies. $2 billion of it will go toward paying off a bridge loan Oman took out last month.
Moody’s has downgraded Kuwait (a first) because its “liquid resources are nearing depletion”. The UAE is also looking at major economic contraction along the lines of that in 2009.
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