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Large Crude Build Forces Oil Prices Lower

Large Crude Build Forces Oil Prices Lower

Oil prices slipped on Wednesday…

New Clashes In Libya Dampen Hopes Of Oil Export Restart

Oil tanker

The Petroleum Facilities Guard and the Libyan National Army (LNA) yesterday locked horns again, at the Ras Lanuf port, which halted the loading of the first export-bound oil cargo at the port since 2014. The LNA took over Ras Lanuf, along with Es Sider, Zueitina, and Al-Brega last week, after they’d been held for years by the PFG.

The PFG, which is affiliated with the UN-backed Government of National Accord, on more than one occasion used the ports as a means to generate revenues, claiming Libya’s National Oil Corporation owed its members wages.

The LNA, for its part, reports to the rival government, the House of Representatives, headquartered in eastern Libya and unrecognized by the international community. Last Thursday, the LNA handed control of the ports over to the NOC. The company’s chairman Mustafa Sanalla told media that all the ports are “secure” and that NOC is already negotiating deliveries with foreign commercial partners.

NOC, which until recently was also split into two rival divisions but has since reunited, had announced earlier last week that it would start exporting 600,000 barrels of oil per day in just four weeks. The company also said that it would ramp up production and exports to 950,000 barrels per day before the end of the year, up from the approximately 250,000 bpd the country is exporting right now.

The tanker that was loading at Ras Lanuf – Seadelta – should have shipped 781,000 barrels of crude to Italy. Now, with the new fighting that has erupted, the accomplishment of NOC’s goals becomes suspect.

What’s bad news for Libya’s oil company, however, is good news for oil traders: Brent and WTI both started the week with gains, as the news about the new wave of clashes between PFG and LNA quenched worries that Libya would add even more to the existing oil glut.

At half past midnight EDT, WTI was trading at US$43.83 a barrel, up 1.86 percent on Friday’s close, and Brent crude was trading at US$46.53, up 1.66 percent.

By Irina Slav for Oilprice.com

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