By Irina Slav
- Libya’s Oil Minister: oil production fell by 1.1 million bpd.
- Libya is losing about $70 to $80 million daily in oil revenues.
- With the Libyan situation unlikely to resolve soon, oil prices now have additional support from lost Libyan barrels.
Libya is producing only about 100,000-150,000 bpd of crude oil as almost all of its fields get shut down amid the latest flare-up of fighting between political factions in the war-torn country.
Oil minister Mohammed Aoun said earlier in the week that the country’s oil production was down by 1.1 million barrels daily—from 1.2 million barrels daily earlier this year. Today, a spokesman for the ministry confirmed the figure, meaning that Libya is producing about a tenth of what it was producing at the beginning of the year.
The conflict at the moment is over the chair of Libya’s Prime Minister. The latest vote was in favor of a candidate backed by the eastern parliament, Fathi Bashaga. However, interim PM Abdul Hamid Dbeibah has refused to give up the seat. Fighting between rival factions ensued in the form of oil export terminal blockades and field shutdowns.
As a result, Libya is losing about $70 to $80 million daily in oil revenues, according to the oil ministry spokesman, as quoted by Reuters.
This latest outage in OPEC’s arguably most troubled member comes at a time when production is stretched across the cartel while demand continues to grow. In fact, OPEC just this week reported its combined production had actually declined in May rather than increased to targets set in the 2021 OPEC+ agreement.
These targets were just raised at the latest meeting of OPEC+ in response to pleas from large oil importers in the West for the cartel to do something about soaring fuel prices. Based on the May figures, however, the chance of OPEC+ actually living up to its promise of a bigger production increase begins to look quite slim.
With the Libyan situation unlikely to resolve soon, oil prices now have additional support from lost Libyan barrels. Brent crude is already trading over $120 and may now stay there for a longer period of time than previously expected because of the events in Libya. On the flip side, Libya has proved it can restart production relatively quickly, which would mean a quick return of barrels once the conflict is resolved.