US Oil To The Rescue As Italy Runs Short On Libya/Iran Challenges

Libya’s oil disruptions would normally wreak havoc in Italy—one of Libya’s top oil consumers—but the United States is serving as a pinch hitter in the wake of civil unrest in the troubled African nation.

Trade flow data from Thomas Reuters and Kpler shows that Italy’s imports of US crude spiked as Libya struggled to ship oil under force majeure in recent months.

In June, Italy imported a record 4.93 million barrels of crude oil from the United States, or 165,000 barrels per day, according to Kpler. That represents a noteworthy increase to the 3.3 million barrels shipped from the US to Italy in May and 1.9 million barrels in April. Kpler predicts that 2.14 million barrels are set to ship from the US to Italy in July.

On the flip side, Libya’s shipments to Italy were 9.73 million barrels in May, followed by a drastic decrease in June to 3.45 million barrels.

Libya had reopened its eastern oil ports in mid-July after they had been shuttered for weeks, but within days, the NOC declared a force majeure on loadings from Zawiya, following an attack and an abduction of oil workers. Production was set to decline substantially as a result of the closure, but Ras Lanuf, Zuwetina, Hariga, and Es Sider have either resumed or are expected to resume shortly. Yesterday, reports surfaced that even more production capacity in Libya was expected to come online as other fields gear up for restart, including Waha and Elephant.

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Libya’s short shipments of oil come at a particularly bad time for Italy, who has also had to dial back imports of Iranian oil; another of Italy’s top oil suppliers. Trading sources in Italy who normally purchase Iranian crude oil told S&P Global Platts that August loading stems would likely be their last, as logistical concerns including financial, shipping, and insurance matters prove difficult for European refiners.

Libya’s shortcomings and Iran’s blacklisting are proving a boon for US oil, and may also be a boon for Iraq’s oil, which also offers a light grade.

By Julianne Geiger for Oilprice.com

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