Libya has yet to resume oil exports one week after the Haftar clan blocked production in a bid to gain control over the Central Bank. Six engineers have reported to Pan-Arab newspaper Asharq-Al-Awsat that oil exports remain suspended at the ports of Es Sidra, Ras Lanouf, Hariga, Zueitina, Brega, and Sirte. While some production has been redirected to local power generation to alleviate fuel shortages, it has not been enough to restart exports.
S&P Global indicates that crude output has been partially restored to about 230,000 barrels per day (b/d) at three eastern fields under the control of warlord Khalifa Haftar. This is a significant drop from the 1.15 million b/d Libya produced in July. Libyan crude exports reached multi-year highs in April, with refiners in Northwest Europe and the Mediterranean particularly valuing Libyan light sweets.
The ongoing shutdown is crucial for oil markets, as it results in “real barrels lost,” tightening the physical market, according to UBS analyst Giovanni Staunovo in a Bloomberg report.
Libya’s oil output instability has been a recurring issue since the First Libyan Civil War in 2011. Commodity analysts at Standard Chartered estimate that the disruptions have led to a loss of over 4 billion barrels of output and cost Libya $320 billion in lost revenue. Despite this, the oil price impact has been muted due to concerns about a potential U.S. economic downturn and a bearish outlook for 2025. Brent crude for October delivery has dropped from $81.25 per barrel a week ago to $76.89 in Monday’s intraday session. Similarly, the WTI contract has fallen from $77.17 per barrel to $73.60 over the same period.
Standard Chartered notes that the ongoing bearishness in the oil market seems unjustified given strong fundamentals. U.S. crude inventories have significantly decreased, with an overall drop of 34.7 million barrels over the past eight weeks, averaging 620,000 barrels per day.