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No, The Oil Glut Hasn’t Disappeared

No, The Oil Glut Hasn’t Disappeared

Weaker than expected oil demand…

Armed Groups Suspend Production At Two Libyan Fields

Libya

Unnamed armed factions have blocked production at the Sharara and Wafa fields in western Libya, cutting the country’s total output by 252,000 bpd, Reuters reported today, citing a source from the National Oil Corporation.

Sharara alone produced 220,000 bpd before the shutdown, accounting for a large chunk of Libya’s overall 700,000 bpd production. It started pumping oil after a two-year pause last December. Later this week, a tanker commissioned by Austria’s OMV is supposed to load 600,000 barrels of Sharara crude from the Zawyia port. According to sources, the loading can still take place from crude stored at the port.

The news sent Brent crude back above $50 to $51.l2 a barrel in European trading, while WTI jumped to $48.10 in electronic trade.

Yesterday, another tanker, a Suezmax, reportedly loaded crude from Es Sider, the biggest oil port in Libya’s Oil Crescent. This was the first shipment after clashes erupted between the Libyan National Army and the Benghazi Defense Brigades over control of Es Sider and Ras Lanuf ports. The tanker was bound for China after loading.

Earlier this week, the National Oil Corporation warned against illegal sales of crude, at significant discount to official selling prices, threatening the country’s revenues from its only marketable commodity. NOC is the only one who is authorized to export oil from the country as per UN resolutions following the civil war, and it can only sell it to 16 companies with which it is in contractual relations.

Related: Oil Prices Spike As Traders Anticipate Bullish Inventory Data

Meanwhile, tensions between NOC and the UN-backed Government of National Accord are heating up after the GNA issued a decree that is supposed to give it more control over oil production contracts and sales. NOC condemned the decree, saying the GNA overstepped its boundaries and that only the House of Representatives, Libya’s legislative body and effectively a rival government to the GNA, has the powers to decree a change in its exclusive grip on Libya’s oil wealth.

By Irina Slav for Oilprice.com

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