Libya’s National Oil Company said it expected oil production to rise to 260,000 barrels per day (bpd) next week, as the Opec member looks to revive its oil industry, crippled by a blockade since January.
Oil prices fell around 5% on Monday, partly due to the potential return of Libyan barrels to a market that’s already grappling with the prospect of collapsing demand from rising coronavirus cases.
Libya produced around 1.2mn bpd — over 1% of global production — before the blockade, which slashed the Opec member’s output to around 100,000 bpd.
NOC, in a statement late on Monday, said it is preparing to resume exports from “secure ports” with oil tankers expected to begin arriving from Wednesday to load crude in storage over the next 72 hours.
As an initial step, exports are set to resume from the Marsa El Hariga and Brega oil terminals, it said.
The Marlin Shikoku tanker was making its way to Hariga where it is expected to load a cargo for trader Unipec, according to shipping data and traders.
Eastern Libyan commander Khalifa Haftar said last week his forces would lift their eight-month blockade of oil exports.
NOC insists it will only resume oil operations at facilities devoid of military presence.
Nearly a decade after rebel fighters backed by Nato air strikes overthrew dictator Muammar Gaddafi, Libya remains in chaos, with no central government.
The unrest has battered its oil industry, slashing production capacity down from 1.6mn bpd.
Goldman Sachs said Libya’s return should not derail the oil market’s recovery, with an upside risk to production likely to be offset by higher compliance with production cuts from other Opec members.
“We see both logistical and political risks to a fast and sustainable increase in production,” the bank said.
It expects a 400,000 bpd increase in Libyan production by December.
NOC said on Tuesday it was lifting force majeure at the eastern Zueitina oil port after conducting security assessments at the terminal and connected fields.
Opec and its allies are watching efforts to resume oil output in Libya very closely, Opec sources said on Monday, although producers should wait to see if there is a sustainable restart before reacting.
Opec member Libya is exempt from cutting oil output under a deal by the Organization of the Petroleum Exporting Countries and allies.
A restart in Libya supply could force other producers to make further reductions to support prices.
Oil prices fell towards $42 a barrel on Monday, weakened by the possible return of Libyan production which has been virtually shut down since January, and as rising coronavirus cases added to worries about global demand.
Three Opec sources said time was needed to assess the situation.
“At this stage, we should watch for some time,” one of the Opec sources said, declining to be identified. “But the market is reacting much faster on bearish sentiment.”
A second delegate said the organisation was watching Libyan production very seriously, and another source close to Opec said Libyan production was less of a concern than demand weakening again due to a new round of coronavirus lockdowns.
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