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US Calls On Libya To Immediately Resume Oil Production

Libya Sharara

The U.S. Embassy in Libya said on Tuesday that the country’s National Oil Corporation (NOC) should be allowed to immediately resume oil operations that were suspended over the weekend after groups loyal to General Khalifa Haftar blocked virtually all oil production and exports from the African oil producer.  

“We are deeply concerned that the suspension of National Oil Corporation (NOC) operations risks exacerbating the humanitarian emergency in Libya and inflicting further needless suffering on the Libyan people. NOC operations should resume immediately,” the U.S. Embassy in Libya said, as the OPEC member’s major oil export pipelines and ports remained blocked for a third day.  

On Sunday, 800,000 bpd—more than half of Libya’s oil production of around 1.4 million bpd—was taken offline after forces loyal to Haftar blocked the oil ports in eastern Libya which are under the control of Haftar’s Libyan National Army (LNA). The move came ahead of an international conference in Berlin between Haftar and the Government of National Accord (GNA), which is backed by the UN.

After the calls for port blockades on Friday, Libya’s NOC said in a statement, via its chairman Mustafa Sanalla:

“If the fields are shut, the production loss will be immediate. We have limited available storage at our main ports. If they are closed, we will need to reduce production immediately, and to shut down entirely when available storage is filled. That could be in as little as five days.”

On Saturday, NOC declared force majeure after LNA blockaded oil exports from the Brega, Ras Lanuf, Hariga, Zueitina, and Sidra ports in the east.

Related: 800,000 Bpd Offline After Haftar Affiliates Halt Exports

Haftar’s forces also blocked production at the El Feel and Sharara fields in southern Libya and the crude transportation from those fields to the Zawiya export terminal.

Oil prices rose on Monday on the news that Libya’s production is suspended, but prices dropped on Tuesday as the market appears confident that the current oversupply can absorb an outage in Libya.

“Market participants appear to fret less about supply disruptions in the Middle East or at least the risk of disruptions thanks to the impressive growth we have seen in US output over recent years,” Warren Patterson, ING’s Head of Commodities Strategy and Senior Commodities Strategist Wenyu Yao, said on Tuesday.

By Tsvetana Paraskova for Oilprice.com

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