Libya’s National Oil Company said it expected oil production to increase to 260,000 barrels per day (bpd) next week. The OPEC member is looking to revive its oil industry, crippled by a blockade since January.
Oil prices declined by around 5% in energy commodities on Monday. The market is grappling with the prospect of collapsing demand from rising coronavirus cases. The drop in oil prices was partly due to the potential return of Libyan barrels to this struggling market.
Libya produced around 1.2 million bpd or over 1% of global production. This was prior to the blockade that slashed its output to around 100,000 bpd.
The NOC says that it is preparing to resume exports from “secure ports”, according to its statement on Monday, . Over the next 72 hours, oil tankers should begin arriving from Wednesday to load crude in storage.
The NOC said, as an initial step, exports are set to resume from the Marsa El Hariga and Brega oil terminals.
The Marlin Shikoku tanker is heading to Hariga. According to shipping data and traders, Hariga is where it will load cargo for trader Unipec.
Commodity news reported Eastern Libyan commander Khalifa Haftar said his forces would lift their eight-month blockade of oil exports.
The OPEC+ Closely Watches Libya’s Return to the Oil Market
NOC insists it will only resume oil operations at facilities devoid of military presence.
Nearly a decade after rebel fighters backed by NATO airstrikes overthrew dictator Muammar Gaddafi, Libya remains in chaos, with no central government.
The unrest has battered its oil industry, slashing commodities production capacity down from 1.6 million bpd.
Goldman Sachs (NYSE:GS) said Libya’s return should not derail the oil market’s recovery, with an upside risk to production likely to be offset by higher compliance with production cuts from other OPEC members.
The bank said it sees both logistical and political risks to a fast and sustainable increase in production. It is expecting a 400,000 bpd increase in Libyan production by December.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia are closely watching the Libya situation, waiting to see if this time Libya’s return to the oil market is sustainable, sources told Reuters.