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A Signal of Strong Short Term Demand in Oil Markets

A Signal of Strong Short Term Demand in Oil Markets

A significant development this week…

Libya Boosts Oil Exports To Europe And The U.S.

Libya has managed to sustain its oil production at around 1 million bpd over the past couple of months and is boosting its oil exports to Europe and the United States, the International Energy Agency (IEA) said Thursday.

“In Libya, we saw another modest supply gain in February to 1.02 mb/d and, although stability cannot be taken for granted, it appears that the frequency and severity of production interruptions is declining and higher rates of output are being maintained,” the IEA said in its monthly Oil Market Report today.

Libya is closing in on Saudi Arabia, which is currently Europe’s third-biggest seaborne oil supplier after Iraq and Russia, the IEA said in its report, as carried by Bloomberg. In the fourth quarter of 2017, Libya also managed to increase its oil shipments to the U.S. compared to a year earlier, while the oil exports of its fellow OPEC members Saudi Arabia, Venezuela, and Iraq to America decreased, according to the IEA. Libya also managed to increase exports to China, the report showed.

The IEA, however, warned that the risk of Libyan supply disruptions remains, despite the fact that recent incidents have been quickly resolved. 

One such incident was a 24-hour disruption of operations at Libya’s largest oil field, Sharara, that resulted in nearly half a million barrels of lost production, Libya’s National Oil Corporation (NOC) said on March 5, confirming that the field resumed production after it had been suspended the day before.

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In a more recent incident, loading operations in Zawiya port resumed on March 13 after a one-day stoppage by marine operations workers.

Libya was initially exempt from the OPEC production cuts together with Nigeria because of the violence in the two countries that had substantially reduced their oil production. At the meeting at which OPEC extended the pact until the end of 2018, Libya and Nigeria agreed to stick to an unofficial collective cap of 2.8 million bpd of oil production. Libya’s oil production rose in each of the three previous months, albeit by just around 10,000 bpd each month, according to OPEC’s secondary sources, but analysts still think that Libyan production will remain unstable as the risk of labor disputes and terminals blockades persists.  

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By Tsvetana Paraskova for Oilprice.com

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