Libya’s National Oil Corporation announced Monday that their output of oil will increase from 500,000 barrels per day (bpd) to 800,000 bpd over the next two weeks and that within the next month, it will increase again to 1 million bpd.
Export Blockade Lifted
Libya has been bearing the burden of a six-year civil war. For the last eight months, one of the warring factions had blockaded the country’s oil exports. A truce seems to have been reached, and exports, as stated above, are expected to start coming fast. This is good for Libya. According to OPEC, their petroleum sector is responsible for 95% of its export earnings.
A Return to Lockdowns?
But what does it mean for the rest of the world? Many countries are once again placing restrictions and lockdowns on their citizens in an effort to curb COVID-19. Global oil prices were already shaky with the winter months’ prospect of bringing a renewal of illness and with it another decrease in oil demand.
Thomas Varga, a senior analyst at PVM Oil Associates, said in an email that OPEC+ “must not be careless and have to address the issue of the extra barrels appearing in the market; otherwise, the days of relatively stable oil prices will be numbered.” OPEC had been on track to ease output restrictions by 2 million bpd in January. However, under the current circumstances, that may change after their next meeting on December 1.
Libya Might be a Little Ahead of Themselves
Libya’s production predictions might turn out to be a little on the optimistic side, though. Zachary Burk, an analyst with Eurasia Group, a political risk consultancy group, said, “There are still serious uncertainties around the maintenance required on many pipelines and fields. These would likely become more apparent at higher production levels and could act as a cap on output.”
Eurasia Group predicts Libya exports will be closer to 800,000 – 900,000 bpd by January, and 1 – 1.1 million bpd in March of next year.