Brent Soars to $113 as Libya Halts Oil Production
By Adedapo Adesanya
The oil market witnessed growth on Monday as supply disruption pushed prices higher after one of Africa’s top exporters, Libya, announced shutting down production.
The Libyan National Oil Company (NOC) declared force majeure on another key Libyan oil field, the 300,000 barrels per day Al Sharara, amid protests that had shut down oil production in strategic places.
According to the NOC, “a group of individuals put pressure on workers in the Al-Sharara oil field, which forced them to gradually shut down production and made it impossible for the NOC to implement its contractual obligations”.
The NOC said it was “obliged” to declare a state of force majeure on Al Sharara “until further notice”.
Al-Sharara is Libya’s biggest oilfield, and the move effectively suspends all Libyan oil production and exports.
The state oil company said that loadings of crude oil at two Libyan ports had been suspended amid anti-government protests that were interfering with oil industry operations.
Loading from the Mellita terminal was suspended following a shutdown in production at the El Feel oil field, with the NOC stating that individuals were preventing the field’s workers from continuing production.
Also, the NOC has shut down operations at the Zueitina export terminal over protests calling for the resignation of incumbent Prime Minister Abdul Hamid Dbeibah.
The NOC has been eyeing a ramp-up in production to 1.4 million barrels per day for Libya, but a new political battle is setting the stage for a potential return to civil war.
This caused the price of the Brent crude to jump 1.13 per cent or $1.26 to $113.0 per barrel as the United States West Texas Intermediate (WTI) crude rose 0.82 per cent or 88 cents to $107.8 per barrel.
On the political front, two rival governments have now emerged in Libya, with incumbent Prime Minister Deibah refusing to step down for newly sworn-in eastern prime minister Fathi Bashaga, who last week said his forces would take over the capital Tripoli peacefully.
The latest protests that have led to force majeure appear to be engineered by supporters of the Bashaga to gain control of the oil industry from supporters of the incumbent Dbeibah.
Prices were pressured by concerns about energy demand in China, whose economy slowed in March, taking the shine off first-quarter growth numbers.
The largest oil importer also faces a worsening outlook already weakened by COVID-19 curbs.