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Warring factions in Libya signed a countrywide ceasefire on Friday brokered by the United Nations. The ceasefire is poised to lead to more Libyan oil supply to the market at a time when demand is weak, and OPEC+ prepares to ease production cuts as of January.
The UN-led mediation by the 5+5 Joint Military Commission, representing the UN-recognized Government in Tripoli and the self-styled Libyan National Army (LNA) of General Khalifa Haftar, agreed to a ceasefire, which UN Acting Special Representative, Stephanie Williams, said could help secure “a better, safer, and more peaceful future for all the Libyan people.”
According to Williams, all foreign fighters and mercenaries in Libya should leave the country within three months. In addition, there were “good indications that the oil installations of Ras Lanuf and Es Sider will be ready to resume production in the near future, in a very short period of time,” Williams said at a news conference, as carried by Reuters.
Haftar, whose troops, with help from affiliated groups, had blockaded Libya’s oil ports in January, announced the end of the blockade on September 18.
Since then, NOC has gradually lifted force majeure on some of the oil terminals and oilfields, and Libya’s crude oil production has increased over the past month from below 100,000 barrels per day (bpd) during the blockade to as much as 500,000 bpd last week.
Earlier this month, NOC announced that it had lifted the force majeure on the largest Libyan oilfield, Sharara, which has the capacity to produce more than 300,000 bpd. As of last week, Sharara was pumping around 100,000 bpd and has further increased output to some 150,000 bpd early this week, sources familiar with the matter told Reuters on Monday.
The return of Libyan oil to the market has weighed on oil prices in recent weeks, and even the OPEC+ group is closely monitoring the supply increase from the country. Libya is exempted from the production cuts and could derail the alliance’s efforts to prop up oil prices and the plans to have the ongoing cuts eased by another 2 million bpd as of January.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.