Libya has bumped up its daily crude output above 700,000 barrels and, just yesterday, seized two tankers illegally loading crude. That may be good for Libya but it’s certainly not good for international oil prices.
So what happens when this OPEC member, which has been exempted from the production cut, does something like that, that is, raise its output and strengthen control over exports? A production disruption happens, that’s what. I’m willing to bet money that we’ll hear about another one by the end of the week.
The Sharara field alone can pump up to 300,000 bpd if it reaches full capacity. Imagine where prices will go if Libya ramps up its production to 1 million barrels, which is actually the plan of the National Oil Corporation for this year.
There’s also no talk about it joining OPEC in its cut efforts, unlike Nigeria, which — rather sweetly I thought — said it will join the cut as soon as it boosts its output to pre-military attacks levels, sometime around November, that is, towards the end of the six-month extension, if it happens at all. It’s almost certain right now but anything can happen. market share loss is no joke.
There are more than enough militant groups in Libya to choose from to block a pipeline or an export terminal, as we’ve seen over the last two months. So, expect more developments in the coming days, especially if prices stubbornly stay where they are right now, which is way too low for a lot of big-shot producers.