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Oil Prices Nearing Breakout Levels

Oil Prices Nearing Breakout Levels

The recent rally in oil…

Latest Libyan Faction Fighting Drags Oil Output Down

Oil Crescent

The Libyan National Army (LNA), led by General Khalifa Haftar, has bombed the Benghazi Defense Brigades (BDB) faction for a fifth day in the country’s Oil Crescent, and the latest fighting has led to Libya’s oil production dropping by 35,000 bpd to around 660,000 bpd, Reuters reported on Tuesday, quoting local officials and residents.

The LNA and BDB have been fighting over control of the oil ports in Libya’s east since Friday, putting the country’s plan to dramatically increase oil production and exports at risk. In September last year, the LNA took control of three oil export terminals in the Oil Crescent, wrestling them from the Petroleum Facilities Guard, which is affiliated with the UN-backed Government of National Accord.

Since then the oil ports have been gradually opened and handed over to the National Oil Corporation to manage. Thanks to the reopening of the export terminals, Libya ramped up its crude oil production to 700,000 bpd as of January, eyeing a daily average of 1.1 million barrels by the end of this year.

But since the fighting intensified last Friday, Libya’s output had dropped to some 650,000 bpd, and shipments from the Es Sider and Ras Lanuf ports have been suspended until the security situation improves, Bloomberg reported on Sunday.

Related: Oil Prices Hold Steady Ahead Of Inventory Data

On Saturday, the National Oil Corporation issued a statement, saying:

The Chairman of the National Oil Corporation, Eng. Mustafa Sanalla, today said the country’s oil sector must not be a political bargaining chip, and urged all sides to refrain from conflict over oil infrastructure.

Es Sider was reportedly seized by the BDB on Friday, while Reuters sources say Ras Lanuf is also overran by them.

Due to the continuous fighting between rival factions and militias in the country, Libya was exempt from OPEC’s collective production cut deal aimed at easing the global oil glut. In January, Libya’s output was 675,000 bpd, up by 64,700 bpd from December 2016, OPEC secondary-sources figures showed.

By Tsvetana Paraskova for Oilprice.com

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