Oil is expected to continue to rise as Libya’s largest oil field is crippled with an outage.
Despite pegging Libya’s oil production at 700,000 b/d just days earlier; Sharara oil field is now idle, reducing production by 20% to 560.000 b/d. Crude exports have also been halted in Zawiya and Mellitah. Little information is given regarding the cause of the shutdown; making it difficult for investors to know if this is a prolonged event or a minor hiccup to be resolved in a few days.
Libya is politically unstable, oil production and exports are routinely halted. Rebel fighters briefly took control of Es Sider oil export terminal and it was only recently re-opened after a 3 week stoppage. If anything is certain; it’s that Libya can’t guarantee the safety or production of their oil fields.
Oil futures have risen for the 5th straight day and Russia’s Energy Minister Alexander Novak would like to extend the 6-month deal with OPEC, limiting production. The cuts have stabilized the market; but it’s too soon to decide whether the pact should be extended.
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