Libya is yet to resume oil exports one week after the Haftar clan blocked production in a bid to gain leverage over a battle to control the Central Bank. Six engineers have told Pan-Arab newspaper Asharq-Al-Awsat that exports remained halted at the ports of Es Sidra, Ras Lanouf, Hariga, Zueitina, Brega and Sirte although some production was being increased to feed local power generation and ease fuel shortages.
According to S&P Global, up to 230,000 b/d crude output has been restored at three eastern fields under the control of warlord Khalifa Haftar, a far cry from Libyan output at 1.15 million b/d in July. Libyan crude exports reached multi-year highs in April, with refiners in Northwest Europe and the Mediterranean prizing Libyan light sweets.
The Libya development is highly significant to oil markets because it represents "real barrels lost, effectively tightening the physical market for as long as the Libya crisis lasts, UBS analyst Giovanni Staunovo has told Bloomberg.
Periodic instability in Libya's oil output has been a recurring feature since 2011's First Libyan Civil War, with commodity analysts at Standard Chartered estimating that it has led to a loss of just over 4 billion barrels of output and cost the North African country $320 billion in lost revenue. However, the Libya oil shutdown has failed to lift oil prices thanks to heightened fears of a hard landing in the U.S economy, as well as a bearish outlook for 2025. Brent crude for October delivery has plunged from $81.25/barrel a week ago to $76.89 in Monday's intraday session while the corresponding WTI contract has fallen from $77.17/barrel to $73.60 over the timeframe.
According to StanChart, the ongoing bearishness in oil markets is hard to justify given the healthy fundamentals. For instance, U.S. crude inventories have seen a big fall, with the cumulative decline in inventories over the past eight weeks clocking in at 34.7 million barrels, an average of 620 thousand barrels per day (kb/d).
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More